retail shrinkage
4 Prime Sources Of Your Retail Shrinkage & Ways To Overcome It

Retail Shrinkage or ‘Shrink’ as many like to describe it is- a reduction in your retail set-up inventory caused due to employee theft, shoplifting or other forms of errors. The common circulating misconception is that most retailers bear their shrinkage losses as a part-and-parcel of the cost of doing business. But little do they realise is that factoring these loses into their bottom line only poses an issue for everyone involved in the business.

Digging Deeper Into This:-

The average loss due to shrinkage in the retail industry is around 2% of the sales. And, although this may not seem too much, the National Retail Security Survey clearly stated that the overall shrinkage loss was found to be $49 billion in 2016-17.

Now do the math- If your retail set-up yielded approximately ($1 million in sales) keeping 50% as gross margin, a 2% shrinkage would cost you $10,000. This is a considerable sum of the loss and clearly something you cannot afford to bear every time.

“So…Your Aim Should Be To Identify Your Prime Sources Of Retail Shrinkage And Overcome It With Apt Loss Prevention Security Strategies.”

Here are 4 Common Causes Of Retail Shrinkage


As per the ‘National Retail Security Survey’; the biggest cause of retail shrinkage is shoplifting. “And as per the 2014-15 reports, it accounted for approximately 38% of shrinkage loss.”

Shoplifting or customer-theft happen due to concealment, swapping price tags or transferring one container to another. To prevent such ill-practices; you need to install CCTV surveillance cameras with 360-degree video recording to keep an eye on everything that’s happening in your retail set-up. You can also opt for digitised tags which trigger alarms to let everyone know about a malpractice.

In addition to those loss prevention measures; also look to appoint experienced security guards to help you curtail shrinkage losses, and even apprehend that budding miscreant responsible for the theft.

Employee Thievery:-

“In the year 2014- employee thievery resulted in 34.5% of loss due to shrinkage.”

This mainly happens when the company workers rob or misappropriate your retail funds for goods and items. The common forms of employee theft include- Refund abuse, Discount abuse, and even Credit/Debit card abuse.

To Prevent This; You Need To Levy Rules Like-

Checking your worker’s bags and personal belongings before they exit your store.

You also need to check the cash drawer, even if that means counting the amount it has after the shift’s end. And even if you come across a difference of 5%, you have to apprehend that specific employee who marked the drawer as balanced.

Vendor Frauds:-

‘Around 7% of retail shrinkage is caused due to vendor frauds.’

This is more so when your retail set-up is decent-sized, and you have vendors coming and going constantly to stock up your inventory.

Take for example- these vendors check and monitor your store inventories, and if your chosen one turns out to be a dishonest one, then you will have to face issues of stolen products or inventory not meeting the invoice.

Whatever be the case, unchecked vendor fraud can cut into your retail bottom line and result in considerable losses over time.

Errors in Paperwork:-

‘Approximately 16% of retail shrinkage results due to administrative paperwork errors.’

Pricing mistakes resulting due to mark-ups/markdowns can cost you significantly. To prevent this; you need to incorporate easy-to-use accounting systems and programs to make a noticeable difference. With the help of such machines, you can easily uncover the errors made in the POS system, perhaps even before the inventory is sold off and becomes shrinkage.

We Offer Prompt & Reliable Loss Prevention Services:-

“Canadian Security Services”- provides you with effective and unobtrusive loss prevention service in Mississauga for your retail setting. Whether you require effective security equipment or diligent security guards to safeguard your retail shrinkage losses- we can meet all your demands.

We can supply you discreet surveillance systems, centralised 24×7 dispatch centre supervised and experienced and motivated guards wearing uniform safety codes.

We are your trusted name for all your customised loss prevention service in all of Toronto. So, get in touch @ 18669259889 (Toll-Free) or 647 409 3789 (Direct) whenever convenient for you.

‘Prevention is always better than cure.’