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Go Back to www.IndependentRetailer.com SECURITY Time to Stop Shrink


ACCORDING TO the most recent National Retail Security Survey, shrink climbed to 1.58 percent of retail sales in 2010, up from 1.44 percent in 2009. The study showed the extent to which retail losses ham- mered away at profi tability, costing retailers $37.1 billion in 2010, up from $33.5 billion in 2009. To LP profes- sionals, shrink conjures visions of millions of dollars gushing out of the retail organization every year. Their efforts to identify the sources of loss and correct problems can sometimes feel like trying to keep water from leaking out of a bucket fi lled with holes. New technologies, regulations, and multiple players add to the complexity of the retail


business, constantly introducing new risks. These factors also create a “moving target.” According to the same survey, the


majority of retail shrinkage in 2010 was due to employee theft, at $16.2 billion, accounting for 43.7 percent of total losses. Retailers reported that 18.7 percent of cases involved collaboration between internal and external players. Retailers lost $12.1 billion to shoplifting (32.6 percent). Other sources of loss included ad- ministrative error ($4.8 billion and 12.9 percent) and vendor fraud ($2 billion and 5.4 percent). Retailers said that the cause of the remaining shrinkage was unknown. How can LP professionals begin


to reverse this trend and make sig- nifi cant strides in combating shrink? One answer to this question may lie in the details: the minutia of retail operations. It will be useful to think outside of the box when looking for ways to “plug the holes” associated with administrative shrink. These are tiny errors in the way information is inputted, exceptions are handled, or data is tracked that are multiplied by millions of transactions, thousands of items and hundreds of stores. For example, an incorrect price for a single item entered in a POS sys- tem triggers shrink on thousands of items. Or perhaps damaged items are returned to the vendor and not prop-


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