- 10 -
inventory periods. Target generally reviewed the most recent 3
to 5 years of store and company experience in arriving at a
companywide rate. Target also considered a variety of other
factors known to affect the rate of shrinkage (shrinkage rate),
including demographics, crime levels, management problems,
paperwork problems, measures to improve shrinkage, industry
trends, performance of warehouses, and store acquisitions.
The next step in the process was the determination of
accrual rates for each store. After considering store-specific
information, Target would assign a preliminary accrual rate to
each store. Target then adjusted those rates so that the sum of
the individual store rates multiplied by each store's projected
sales figures would equal the projected shrinkage dollars at the
company level as determined from the companywide accrual rate.
The adjustment for a specific store's accrual rate would not
exceed 0.1 percent of its projected annual sales.
Lastly, Target adjusted accrual rates at the department
level within each store, based upon a 3-year average shrinkage
rate for the department on a companywide basis. Those department
rates were further adjusted to accord with the shrinkage rate for
each store in proportion to each department's sales relative to
the store's total sales during the most recent 12-month period.
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011