From Fortune Magazine:

Retailers saw a loss exceeding $100 billion from shrink in 2022, which has more than doubled over the past five years. As social media and media coverage of the issue continues to grow, consumers are starting to understand the impact on prices. Retailers need to quantify sources of shrink and paint a more accurate picture.

Shrink is not just about customer theft, but extends through the entire value chain and involves various players. Retailers need to identify the various sources and drivers of shrink within their organization to develop a comprehensive strategy. A data-driven approach to measure areas of loss is essential for deploying targeted mitigation techniques with the greatest impact.

Retailers often struggle with disconnected, off-the-shelf shrink solutions that are not linked to the underlying root causes. A unified view from multiple data sources can provide insight into specific solutions for reducing shrink, such as moving, removing, or locking specific products. Predictive modeling and holistic data-driven models that connect information from across the organization can help pinpoint individual origins of shrink.

To combat shrink, retailers must take a four-step approach: aggregate information across the organization, analyze major sources of shrink, address the issue with corresponding mitigation techniques, and monitor the impact and make informed adjustments. Mitigation techniques must be employed to make a meaningful difference in reducing shrink, based on a thorough understanding of the unique shrink problems a company is experiencing.



Read more: Why retail’s $100 billion ‘shrink’ crisis may not be all about shoplifting