What Is Retail Shrinkage and How Can You Protect Your Company from It?

Suppose you have a large warehouse full of goods that you need to take through a production process, quality examination process or retail process. Depending on the amount or number of items you have in your warehouse at any given time, the number of activities that are performed around them or on them, and the amount of time that the items remain stored in the warehouse, the likelihood of them ending up lost or damaged grows to a great extent.

Whether it’s done deliberately, through fraud, theft or vandalism, or inadvertently, through human error, the loss of these items is classified as retail shrinkage once the finished item enters the retail cycle.

If you have a store that loses items from storage on a regular basis, you might have a serious retail shrinkage problem. Fortunately, through loss control, this problem can be remediated by figuring out exactly how many items were lost, why and who was the culprit.

This can be done through detailed inventory, where all the items that are in your database are checked physically in the warehouse or storage room. If they’re damaged or they aren’t there, then an investigation is started to find out precisely what happened and whether human error is to blame, or one of your employees or customers who performed a deliberate act of theft or vandalism.

Another method of managing shrinkage is to install commercial security camera systems in strategic areas to identify inventory mismanagement, theft, or document effectiveness of operational processes.

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