How to Reduce Retail Shrink

Alarmingly, UK retailers also reported the highest level of administrative and non-crime losses globally, with 40% of retail shrink resulting from internal mistakes, such as pricing errors.

These figures reinforce the importance of maintaining control over your retail shrink at all times. Understanding the key causes is essential:

• Employee Theft

• Shoplifting (Customer Theft)

• Administrative Errors

• Supplier Errors

Shrinkage is a major contributor to reduced profit margins. Tackling theft—whether internal or external—as well as minimising administrative mistakes, is crucial to protecting your bottom line.

How to Reduce Retail Shrink

Employee Theft

• Hire carefully: Thoroughly vet all new hires. Verify employment history, follow up on references, and assess whether candidates are a good cultural fit.

• Promote transparency: Communicate clear zero-tolerance policies on theft. Foster open dialogue, address staff concerns, and encourage a positive workplace culture that promotes ethical behaviour.

• Conduct regular audits: Scheduled and surprise audits help detect anomalies and act as a deterrent to dishonest behaviour.

Customer Theft

• Train your staff: Ensure employees can recognise common behaviours of shoplifters, such as avoiding eye contact, watching staff closely, wearing bulky clothing, or entering in large groups.

• Acknowledge every customer: A simple welcome can be an effective deterrent. Visible staff presence makes it clear that the store is monitored.

• Keep the shop floor tidy: An organised store makes it easier to spot missing items. Keep high-value goods within line of sight and avoid blind spots.

• Use data to your advantage: Analyse CCTV footage, stocktaking records, and point-of-sale data to identify suspicious activity or stock discrepancies.

• Have a clear returns policy: Display it prominently and require proof of purchase to prevent fraudulent returns of stolen goods.

Administrative Errors

• Minimise paperwork mistakes: Ensure staff are properly trained in all administrative procedures, especially stock and pricing systems.

• Introduce double checks: All documentation should be reviewed and signed off by two individuals to reduce the risk of error.

• Use audits to spot mistakes: Pricing and inventory audits can quickly flag inconsistencies on the shop floor.

Supplier Errors

• Verify every delivery: Cross-check items received with the original order to confirm accuracy.

• Review documentation: Ensure pricing and quantities are correct and match delivery records.

• Monitor returns: Check that goods being sent back to suppliers match return notes.

• Check expiry dates: For perishable goods, confirm that sell-by dates allow adequate time to sell.

• Secure delivery areas: Install surveillance in loading zones to deter theft during deliveries or returns.

By addressing these common causes of retail shrink and implementing strong preventative measures, you can protect both your stock and your profits. Reducing shrinkage isn’t just about loss prevention—it’s about building a more efficient, secure, and profitable retail operation.