In 2017, Adrian Beck, professor in the criminology department at the University of Leicester, published a piece in Security Journal outlining a new conceptual typology regarding loss. Beck argues that “shrink” is an antiquated term that lacks a clear definition in the retail industry. [Editor’s Note: Beck published a piece Read More
In the retail environment, the term “shrink” or “shrinkage” refers to the difference between the amount of merchandise (or inventory) that the company owns on its books, and the results of a physical count of the merchandise. Shrink can come in many forms, and impact a business in many different ways. The primary causes of retail shrink include operational errors, internal issues, and external losses.
• Operational errors can involve POS software glitches, paperwork issues and other operational missteps. These incidents typically occur when processing a transaction, receiving merchandise, shipping merchandise, or taking inventory.
• External losses can involve theft by customers (primarily shoplifting), issues involving vendors, or other incidents that pertain to those not working for the company.
• Internal losses are the result of incidents that involve store associates and other company employees who take advantage of opportunities to steal from the company.
In addition to theft issues, damage, waste and spoilage can directly contribute to a company’s losses.
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When merchandise is stolen or otherwise unaccounted for, it not only impacts the company as a result of the missing product, but also skews our inventories in other ways. This not only impacts current sales, but also affects product replenishment and future sales as well. This can have a significant impact on the bottom line, and a direct influence on the health of the company. Every year, shrink issues cost retail businesses tens of billions of dollars. This is a real and growing problem that affects all of us in a variety of different ways.
This is a much more complicated problem than simply accounting for the theft of merchandise and the direct loss of profits. Managing shrink is a critical aspect of inventory control, which involves the management of the supply, accessibility, storage, and delivery of the company’s goods. As a result, retail shrink reduction strategies require a multifaceted and broad-based approach in order to successfully manage the process.
“What is the single most important measure of the success or failure of your company’s loss prevention efforts?”
If you were to ask senior retail executives this question, the answer you would likely hear is, “Our shrinkage results.” This would not be surprising, as shrinkage affects profitability, shareholder return, resource allocation Read More
You are driving to work as a supermarket supply-chain manager. The hot weekend weather has continued, it’s a lovely Monday morning, yet you’re surprised when your boss calls so early. Agitated, he shares how he just discovered from the CEO that all stores were reporting a massive sales loss because Read More
Chances are, you’re heard someone say “sales cure shrink” or they plan to “outsell their retail shrink.” When this statement is used, the person uttering the words often has no idea what they are saying. Because of this, it’s easy to dismiss this statement. After a while, it may even Read More
At a time when store margins are under intense competitive pressure, retail shrink can make or break a retailer’s bottom line. But today’s retail shrink numbers are vulnerable to blind spots and imprecise metrics. In addition, most analysis and response to retail shrink are backward-looking: useful for staffing and long-term Read More
What does a typical inventory control job description entail? Whether the specific title is inventory control clerk, specialist, manager, or coordinator, this vital position is usually responsible for ensuring an accurate and adequate quantity of product in a given organization.
In a nutshell, this person manages the inflow and outflow of Read More
A recent report from the Retail Industry Leaders Association advocates a radical new way to think about how to understand and measure retail loss.
Shrink No Longer Cutting the Mustard
There is no agreed definition of what constitutes “shrinkage.”
Most estimates are based only upon measures of merchandise losses where the Read More
One question I have been asked frequently is, “How did you know how to battle retail shrink in the grocery business, especially considering your background is predominantly in discount retail?” My response to that question is almost always the same, which is: “I follow the loss prevention road map.” Often Read More
While the perception of shrinkage among the loss prevention industry has evolved from thinking about loss strictly in terms of theft to the consideration of all causes of inventory discrepancy, this change in approach hasn’t necessarily diffused into all of the other teams in a retail organization. Retail buyers are Read More
In the mature and highly competitive retail sector, ensuring that the right product is on the right shelf at the right time is critical. Yet the problem of shelf out-of-stocks (OOS) remains as stubborn as ever. Could the loss prevention team be the key to unlocking this new sales opportunity?
This Read More