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3 Inevitable Causes of Shrinkage - Plus Simple & Easy Hacks to Beat It

Are you concerned about shrinkage in your business? Read our latest article to learn about the three main causes of shrinkage and how to combat them.

The Three Inevitable Causes of Shrinkage (and How to Fight Them)

Shrinkage is the bane of every retail manager’s existence. It’s the difference between the inventory you think you have on the shelves and the inventory you actually have. And it can be a big problem: in the US alone, shrinkage costs retailers $45.2 billion a year.

There are a lot of factors that can contribute to shrinkage, but there are three main causes that are responsible for the vast majority of shrink. Once you understand what’s causing your shrinkage, you can start to put processes and procedures in place to fight it.

1. Employee Theft

According to the National Retail Federation, employee theft is the leading cause of shrinkage, accounting for 43.5% of all shrink. Employee theft can take many forms, from stealing inventory to pocketing cash from the register.

There are a few things you can do to combat employee theft:

  • Install security cameras and make sure they’re visible.
  • Conduct regular inventory audits and compare them to sales reports.
  • Implement a “mystery shopper” program to test employee honesty.
  • Offer employees rewards for catching theft or reducing shrinkage.

2. Shoplifting

Shoplifting is the second leading cause of shrinkage, accounting for 33.7% of all shrink. Shoplifting can be difficult to prevent, but there are a few things you can do to deter would-be thieves:

  • Install security cameras and make sure they’re visible.
  • Place high-value items in well-lit, high-traffic areas.
  • Use security mirrors to increase visibility in hard-to-see areas.
  • Put up signs warning of the consequences of shoplifting.
  • Train employees to be on the lookout for suspicious behavior.

3. Administrative and Vendor Error

Administrative and vendor error is the third leading cause of shrinkage, accounting for 9.6% of all shrink. These errors can include things like incorrect inventory counts, misplaced merchandise, or damaged goods.

There are a few things you can do to reduce administrative and vendor error:

  • Implement regular inventory audits and cycle counts.
  • Cross-train employees in different areas of the store.
  • Use barcodes and scanning technologies to improve accuracy.
  • Work with vendors to establish quality control procedures.

Shrinkage is a big problem, but it’s one that you can fight. By understanding the causes of shrinkage and taking steps to combat them, you can start to reduce the amount of inventory that disappears from your store.

Yes, aging is inevitable, and for most men this means shrinkage and a loss of stiffness. But these simple & easy hacks can prevent the decline. I’ll show you how to age gracefully down there!

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Video transcription:

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