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Surprising Causes of Shrink in the US Retail Market

What causes shrink in the United States? The United States is something of an outlier amongst countries included in the 2013 Global Retail Theft Barometer. According to that study, American retailers experienced the lowest relative amount of shrink due to shoplifting of all surveyed countries, and the highest relative shrink due to administrative losses.

Shoplifting accounted for 34% of total shrink in the United States, as compared to China’s 38%, Germany’s 49%, and Spain’s 50%. Employee theft accounted for 32% of total shrink in the United States, and supplier fraud for 8%. Administrative and non-crime losses made up 26% of total shrink experienced by American retailers, more than 10% higher than in most other countries, and the highest of all countries surveyed.

If the majority of your retail loss prevention funding goes to snuffing out employee theft, you might be missing a great opportunity to reduce shrink in your stores. Logistical improvements, such as reducing the amount of on-hand inventory and process-related losses, can improve your retail operation’s shrink as much, if not more so, than expensive EAS/RFID systems.

When composing your retail audits, consider checking not just whether the door to the storage room is locked, but also whether a leaking pipe in the storage room is going to cause more shrink than a shoplifter could ever dream of.