Advanced Loss Prevention Solutions LLC

So What Exactly Is Shrink?

When first hearing the term "Shrink", as it pertains to retail business, many people think of losing a size or two in their favorite pair of jeans. What shrink actually refers to is the loss of bottomline profit from employee theft, shoplifting, vendor fraud and administrative error.

Some forms of shrink, such as administrative error which includes breakage, are easily noticed. Others like employee theft and shoplifting may not be noticeable until huge inventory losses have occurred. Thieves, whether they're employees or shoplifters, will steal mostly in small amounts at first. The problem is they continue to steal frequently and in ever increasing amounts until they are stopped. An unwary small to medium sized business owner without proper controls in place may lose a large portion of their profit before they even realize there is a problem. There are cases where retail establishments, both large and small, have had to close their doors as a direct result of shrink.

How does a business successfully deal with shrink? Most businesses take inventory annually, however, if this is the only way of determining your losses can you afford to get this information only once a year? Quite a few businesses use data mining to help them with sales trends or accounting functions. This can be quite useful at stopping internal theft as well. Creating reports that compare refunds, voids etc. to an average will help identify growing loss issues. Using found packages and tickets from stolen inventory can give you a snapshot of what you are losing right now. Probably the best action you can take is to look at the policies and procedures currently in place. Are your cash handling procedures adequate? Is your refund policy a temptation for a potentially dishonest employee?

If you are a small to medium sized business owner you're probably thinking that you do not have enough time left in your day to adequately address these issues. Successfully addressing shrink issues does take time. Many of the larger corporations have the benefit of in house loss prevention departments that handle these issues. Smaller businesses cannot afford to maintain a loss prevention department of their own. The answer to this problem for many small businesses is to utilize outside loss prevention companies. This allows them to have their own loss prevention department when they need it but not have to maintain it when it is not needed. If this is a potential solution for your company's shrink problem make sure the loss prevention company you choose has a proven track record of shrink reduction and is one in which you can build trust.