In his bestselling book, The 7 Habits of Highly Effective People, Stephen Covey presented a holistic, principle-based approach for solving personal and professional problems. This got the ECR team thinking, what if for “highly effective people,” we read “low-inventory shrink retailers”? What then would be the habits of low- shrink 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.
Inventory loss is a fact of life in retail. When maintained at acceptable levels, it’s simply the cost of doing business, much like payroll and other operating expenses. However, when shortage begins to inexplicably trend upward, whether on a store-by-store basis, or even across a chain, it becomes imperative to view the Read More
Few things are as frustrating for a loss prevention leader than discovering a bad packaging design they know will promote retail shrink, which could so easily have been prevented if those who created and approved the packaging had included shrink reduction in the initial design criteria. For example, in a Read More
Today’s retail environment is as competitively challenging as ever. The retail sector of our economy is in constant change, moving with evolving technology, adjusting to consumer demands, and anticipating trends. The bedrock upon which healthy retailers are built is the supply chain that provides the goods to be sold. A Read More
Each year, loss prevention directors are evaluated based at least in part on retail shrink results. At a minimum, poor retail shrink numbers negatively affect bonuses and department morale. At times, unacceptable results may even lead to dismissal.
Forward-thinking LP professionals, like golfers in search of the key that will elevate Read More
In the generally unyielding area of retail loss prevention, few US corporations have been highly successful in staunching the pervasive problem of inventory shrinkage—the problem that refuses to go away. This post highlights nine key shrinkage control approaches that could potentially save US retailing billions each year.
For retail loss prevention practitioners across Read More
We are all familiar with use of the word “shrinkage” to describe the losses experienced by retailers, although it is impossible to find any industry-wide agreement on what it actually means or the types of losses that are typically included when it is used by different retailers. For some, it Read More
The evolution of the loss prevention profession has required a change in the way that we approach the retail environment. First, we have come to recognize that inventory shrink is a more complicated problem than mere theft of merchandise. Shrink is a complex issue that must consider a variety of issues. Shrink Read More
Most retail companies have a department dedicated to maintaining processes and procedures related to inventory management and retail shrinkage. The inventory control department ensures that optimum inventory levels of products are available and accessible to the stores; that stock levels/turnover are efficiently managed; that inventory is maintained in a safe Read More
Understanding how to calculate shrinkage in retail is a fundamental but critical concept within the loss prevention profession as well as throughout the retail industry. Ultimately, retail shrink directly results in lost profits, and can have a dramatic impact on the success of the retail enterprise.
The term “retail shrink” or Read More