Hand holding coin to green and blue scratch-off ticket with additional scratch-off tickets in background.
What steps are you taking to protect your lottery from shrink?

It’s a well-known fact that lottery is a high shrink item for convenience retailers.

You know the story. A customer walks into your local convenience store, picks up a cold beverage, maybe a snack, and heads to the counter to check out. Once there, he spies the brightly colored lottery tickets across the counter, next to the cashier. On an impulse, he buys one. Actually, he buys two. He pays $4, and the cashier smiles and wishes him ‘good luck.’ He walks out the door carrying his purchases to the car and grabs a coin to scratch off the thin layer of foil standing between him and his winnings.

But what about the story only you know? The one the customer isn’t a part of?

Back inside the convenience store, the cashier begins his daily lottery inventory only to discover tickets are missing. A lot of tickets. He remembers the customer pointing for two of the $2 scratch-offs only to realize a handful of $1 tickets next to the register are missing. Despite his best efforts, this isn’t the first time tickets have disappeared. He mutters under his breath, knowing that for each lost ticket, it’ll take another four to make up the missing cost. As thoughts flood his mind, one sticks with him the most: What can I do to combat lottery shrink at my store?

When Shrink isn’t ‘Shrinking’

According to the 2018 NACS SOI Report, merchandise shrink increased 6 percent from 2017 to 2018. At a rate higher than both product spoilage (1.2 percent) and direct store operating costs (5.1 percent).

Whether it’s lottery or candy bars, merchandise shrink heavily impacts your bottom line. On average, convenience retailers lose just over $5,000 in lottery tickets to shrink each year. That’s just lottery! With a margin of 6 percent per ticket, profit recovery for lottery takes its toll on c-stores and eats directly into your yearly revenue.

But worse? As your store’s traffic increases, it becomes a more likely target for shrink. Top-performing convenience stores average $1,219 in retail shrink per month vs. low performing stores, which typically see an average of $491. That’s more than double the shrink!

Are you neglecting easy changes to combat shrink at your store?

How to ‘Shrink’ Shrink

Because lottery is such a high-risk item for convenience stores, you need the right tools to keep your profit where it belongs – in your pocket! It’s important for you to protect your merchandise from those who will take advantage of a turned back, or distracted employee. Don’t worry. You can try to lessen the blow with loss prevention tactics.

The key to combating lottery and general merchandise shrink in your c-store lies within your data. The first step is making sure your c-store captures the data you need for inventory transparency. To reach that transparency, try item-level inventory. This enables accurate, easy reconciliation without with less manual labor.

Low-margin, high-risk items like lottery tickets can quickly see their profits lost due to the significant labor needed to manage them. With an expected profit of $2,396 a month, or almost $29,000 a year on lottery alone, item-level inventory helps you keep that margin. Lottery books can be tracked in detail throughout the buying process: at each store, as they enter the site, are placed in the safe, become activated for sale, sell out, and more.

Retailers often implement operational controls such as manual counts, POS tape, and spreadsheets in an attempt to combat shrink. While these methods can provide some assistance, it’s minimal. If you’re already implementing these tactics, it may be time to step-up your game.

By empowering employees with the right tools and lottery management solutions, you can reduce shrink, save thousands of dollars, and avoid burying managers in time-consuming, error-prone work.

Did You Know: Your Source for PDI News provided by PDI, the leader in enterprise management software for the convenience retail and petroleum wholesale markets.