Are You Experiencing Retail Shrinkage?

Are You Experiencing Retail Shrinkage?

Retail Shrinkage or “shrink” is the difference between what the book inventory and the physical inventory show. This rarely “0” it is normally over or short.

Shortages are usually made up of the one or several of the following loss areas: employee theft, shoplifting, vendor fraud, paperwork errors or improper store-to-store transfers.  According to the University of Florida Retail Study that has been done for many years now the areas of theft generally rank:

Employee theft 48%
Shoplifting 32%
Administrative Error 15%
Vendor Fraud 5%

These percents change very little from year to year. The lesson is that employee theft ranks very high in retail shrinkage. It is always the largest area of loss to a retailer. The basic reason for this is that employees and managers have unlimited access to merchandise and cash. Many smaller retailers do not want to believe this and the excuse that we at Loss Prevention Systems usually hear is “I trust my employees”.

We have one response to this: “Trust But Verify”. Many retailers (large and small companies) use personal trust in place of business trust. Business trust involves trust but verify. If you are using personal trust in a business environment you are asking for trouble.

Want more information: Retail Shrinkage or call 1.770.426.0547