Ideas for Retail Control of Shrink and Loss Prevention

Shrink loss can be a major problem for retail stores.
Shrink loss can be a major problem for retail stores. (Image: Hemera Technologies/ Images)

Shrink loss has been a huge problem in retail for many years. The term is a euphemism for theft and accounts for 1 percent to 2 percent of sales in stores across the country. However, there are a number of strategies to control and reduce theft in your store.

Employee Theft

The number one source of retail shrinkage is employee theft, according to a national survey. The types of theft include improper price reductions, refunds and even credit card abuse. The best way to avoid this problem is to install a strong ethical culture that stresses your firm's values and the punishments for violating the firm's policies. It is difficult to monitor because of the authority that employees have; however, a close examination of individual employees' refund and discount records can give clues as to who is violating the policies.


Some shoplifting strategies include concealment, altering or swapping price tags. Annually shoplifting costs retailers tens of billions of dollars. Extensive store monitoring using employees and security guards can reduce this problem. Install surveillance cameras that focus on entrances and exits, loading areas, cash registers and high-value items. Train employees to spot likely shoplifters and the techniques that are used. For example, many shoplifters work in pairs to distract employees and take off with the merchandise.


Establish anti-fraud processes to ensure that goods are authentic. For example, mandate that any products returned for cash has the original receipt. For merchandise that the customer does not have a receipt for only provide store credit and only upon proof of photo identification. Also, employees should place magnetic strips or security clips on merchandise that sounds an alarm when they are stolen.

Vender Fraud

Another form of shrink loss is vendor fraud, which is when a vendor misstates how much product they are delivering to the store. This obviously will effect the profit of the store as the company pays more for fewer products. Carefully monitor this through counting when the product comes into the store. If it is many small products, use RFID tags and to ensure that everything has been delivered.

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