How You Can Prevent Retail Shrinkage

Retail shrinkage shockingly causes over $100 billion annual losses worldwide for retailers. This is a significant amount of revenue lost and it could be due to various reasons, from internal employee theft to shoplifting and administrative errors. This only emphasizes the need for retailers to invest more of their budget into security measures. Here are some ways you can mitigate retail shrink and draw up a more comprehensive loss prevention plan.


Your surveillance cameras should first and foremost be conspicuous to your customers- there’s nothing wrong with letting your customers know they’re being watched. It’ll make them think twice before attempting to shoplift. Go the added mile, put up signage warning customers that there are cameras and you will prosecute any shoplifters. Having an organized shop layout also helps you stay on top of your monitoring- watch out for any dark, unmonitored spots and overflowing aisles. Keep the more expensive items within your direct line of sight.

Receipts for Returns

Return fraud can be quite difficult to spot and the tricky part is that you don’t quite notice it until they add up throughout the year. So, there are certain precautions you need in place that can limit it as much as possible. Number one, is to have a strict policy on receipt returns for any cash refunds. Train your employees to understand that this is the standard procedure for all customers and also help them notice the tiny signs of a fraudulent shopper. When accepting returns, also make it a point to jot down their ID if they’re customers with consistent or shady return behaviour.

Staff Control

Retailers usually tend to be not so fussy when it comes to their recruitment process. This needs to change. Having cameras in the staff-only section and performing checks as employees leave really doesn’t promote a healthy work culture so ideally you would start from your recruitment process. You need to look for someone who has a strong work ethic and who will be loyal and conscientious in their decisions. While some may be able to work for the pay, you’re willing to dole out, their intentions may not be as pure so you should be very careful when deciding your workforce.


Yet another aspect that incurs its fair share of retail losses are administrative errors. This means there is no ill intention behind the lost sales but it also reflects on a glaring lack of training. Make it a point that it’ll be only you and whoever is manning the front that will have access to the POS cash register so you can prevent employees from sneaking in a few dollar here and there.

POS monitoring and inventory management will also help keep track of transactions and identify how and why certain administrative errors occur. Just because these errors are unintentional, doesn’t mean they cannot be avoided at all. It all requires investing in some proper training.

Retail shrinkage is a very real problem that affects your revenue but these are the best ways you can cut down on your annual losses.

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