How to reduce shrink in retail stores

July 31, 2023

Shrinkage in retail stores is a huge problem. If you work in retail, you’re probably already aware of some of the different types of shrink. Let’s first get some clarity about what we’re talking about. Shrink is when a store loses inventory in a way other than sales.

To see how Solink can help with shrink in retail, sign up for a demo today.

As mentioned above, shrink is when your inventory is leaving your store without you getting paid for it. Depending on the size of your store, these losses can be in the thousands, tens of thousands of dollars, or even more annually. There are some excellent strategies to avoid shrinkage, but it remains a major challenge for many companies.

These losses can also come from different sources, for example internal theft or shoplifting, so it is important to understand where they come from to make informed decisions. Different kinds of shrink may require different approaches.

Learn how Solink’s powerful tools help you reduce shrinkage in your retail business.


Retail shrinkage statistics

Every year, the National Retail Federation’s National Retail Security Survey puts together a report based on its survey of retail loss prevention professionals. In 2022, the report found that shrink was due to a number of factors, ranging from employee theft to organized retail crime (ORC), and amounted to almost $100 billion.

This is up from approximately $90 billion in 2020. With the rise of ORC, old tactics are no longer working, which makes investing in a complete business security camera system so important.

The 2022 National Retail Security Survey noted that the average shrink rate in 2021 was 1.44%. While that is a small decrease from the previous two years, it is comparable to the five-year average of 1.5%.

Retailers also reported an average 26.5% increase in organized retail crime (ORC). The vast majority (81.2%) of respondents said that the violence and aggression associated with ORC increased in the past year.

To see how Solink can help keep you safe from organized retail crime, sign up for a demo today.

To see all the ways Solink can help your business, book a demo today.

Shrink in retail examples

Shrink in retail is complicated. It’s not just shoplifting (although that is certainly part of it) or employee theft. Indeed, not all losses are due to theft or malicious intent. Sometimes these losses can be due to minor and innocent reasons.

Consider a product being put on display that is then damaged and needs to be written off. A manufacturer may not take the product back under warranty, which means that the company experiences a loss.

Retail businesses will always experience shrinkage. However, there’s a big difference between a product damaged by accident and an employee pocketing cash out of the till. The former is a case for retraining, while the latter might lead to an employee being dismissed or require the involvement of law enforcement.

Here are some examples of other things that can lead to retail shrink.

Point of sale fraud

This is a popular type of point of sale (POS) employee theft that happens when employees take some money out of the till and keep it for themselves instead of giving it to the customer. For example, an employee might charge the customer full price when there is a coupon available for the product and then pocket the difference.

This along with under ringing and sweethearting occur at the POS and are sometimes hard to track. However, by pairing video with POS transaction data, Solink makes it easy to see all of your high-risk transactions with a few clicks on your laptop or mobile device.

To see how Solink helps prevent POS employee theft, sign up for a demo today.


Theft by staff

Unfortunately, employees often commit theft. Even a single dishonest employee can be extremely costly. Remember, dishonest employees can steal a lot more than money. A dishonest employee can walk away with anything from data to merchandise. Even time is a resource that can be stolen.


Shoplifting can be hard to spot. However, if you operate a retail business, then shoplifting likely represents a significant portion of your shrink. Shoplifting is when visitors to your business take merchandise without paying.

We’ve recently published some ways to prevent external theft, including shoplifting.

Strategies to reduce retail shrinkage

Being aware of the issue is always the first step to solving a problem.

An important first step in dealing with retail shrink is to calculate what the losses are and where they might be coming from:

  • Are they operational errors?
  • Have there been mistakes with paperwork?
  • Is it the result of organized retail crime (ORC) or shoplifters?
  • Is it coming from a place where it is probably internal theft?

Missing product off a shelf might be due to a shoplifter, but missing merchandise that was under lock and key is more likely to be due to an employee. Getting as much information as possible can help you to make an informed decision about what options you have.

Investing in cloud video surveillance

Gone are the days of bulky, ineffective cameras, and sitting in front of a small screen for hours scrubbing through video footage. Investing in a cloud video surveillance system today will help you maximize your security options while saving time.

Cloud-based video surveillance solutions have major benefits to help prevent shrink in retail. Solink is always operational, compatible with most existing hardware, accessible from anywhere, and always up to date.

To see how Solink can help protect your business from internal and external theft, sign up for a demo today.


To see all the ways Solink can help your business, book a demo today.

How to reduce retail shrinkage

There isn’t a magic bullet to solve shrink in retail. However, there are ways to reduce shrink in your business. In some cases, tools are needed, while in others it is training and knowledge that are key. Here are some things you can do to combat shrinkage in retail:

  1. Set clear expectations.
  2. Ensure that staff have personal accountability.
  3. Implement best practices when dealing with customers.
  4. Make sure to clean often.
  5. Invest in a proper security system.
  6. Operationalize your data.

Let’s review these six points.

1. Set clear expectations

One way to avoid potential retail shrink over time is to make sure that expectations are clear. Without clear guidance and expectations being communicated to employees about what is and is not acceptable, they may be more inclined to bend or break rules.


Having a co-worker clock out an employee after they’ve left might seem like it’s not a big deal, but this can add up over time to thousands of dollars.

It’s important to keep talking to staff about theft on a regular basis and not just during onboarding. This tells them that you take theft seriously.

2. Personal accountability

While it may seem like a small thing, consider giving more of your employees roles with greater responsibility (assistant managers, keyholders, and so on). This can lead to those tasks being done more carefully as personal reputation and ownership of tasks is now on the line.

While this particular example has its own drawbacks, reducing shrink is a team effort.

3. Best practices when dealing with customers

Proper training for employees on how to interact with customers can help them to identify the tell-tale signs that a person might actually be a shoplifter. It’s important for staff to greet all customers that walk through the doors and engage with them consistently.

This lets the customer know that the staff is aware of their presence. It’ll also lead to more sales and a better customer experience.

4. Cleaning

While it might be hard to see why cleaning leads to better security, it allows two major things to get done. First, it gives staff the opportunity to notice if anything is not how it should be (empty packaging, product where it shouldn’t be, and so on).

Second, it provides a good reason for staff to move around the store and to position themselves near customers in case they need help. Shoplifters are far less likely to steal if they believe they are being watched.


5. Investing in security systems

Security systems come in all shapes and sizes, from dummy cameras that are meant to dissuade thieves by their presence to high-tech options that integrate into smart devices and upload their data to the cloud. While any security is better than no security, it’s important to make sure that you’re getting the best option for your business.

Sometimes, the best option is to entrust your security to experts. Not all businesses are aware of all the options available to them, so asking for advice can make the difference between protecting your company’s assets, thereby reducing retail shrink, and wasting precious resources and money.

6. Operationalize your data

Operational shrink can dwarf internal and external theft. Despite this, few companies are aggregating the data required to track how operational shrinkage is affecting their business, as well as analyze trends. Two key operational shrink metrics are sales reducing activities (SRAs) and sales reducing transactions (SRTs).

Here are their definitions:

SRAs: Sales reducing activities (SRAs) are activities within a business, especially at the point of sale, that reduce sales volume incorrectly, as measured by number of transactions, size of transaction, and/or price of items sold.

SRTs: Sales reducing transactions (SRTs) are business transactions that reduce sales volume incorrectly, as measured by number of transactions, size of transaction, and/or price of items sold.

By aggregating all of your SRAs and/or SRTs into a single metric, you can see which stores, employees, days of the week, etc. are having the biggest negative impact on shrink in your retail locations.

To see all the ways Solink can help your business, book a demo today.

With Solink’s powerful tools, you can gain visibility and control over your business. By integrating with existing security cameras in your retail store and using any browser or mobile device, you can have access to your business from any place and at any time.

You can even store your video in the cloud and easily access it later, helping with training or evidence collection. When a theft event is found, you can share that clip with law enforcement by email with the click of a button.

With so many valuable tools at your disposal, it’s easy to see why Solink is the best way to reduce shrink in retail stores.

To see how Solink can help you get a handle on your shrink, sign up for a demo today.

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D.J. Mcphee |

Derek is a voracious reader. He is passionate about stories and how they can inspire, and he brings this attention to detail to his work as a writer and editor. He can often be found near a coffee machine, trying to master how to make the perfect espresso.