The Bunker Blog

When money is tight, a couple of things happen in regard to retail shrink. First, there is usually an increase in theft related activity, both external shoplifting and employee theft. People feel like they are making less these days. This is due to increasing costs and prices, and many companies are cutting unnecessary spending in order to offset some of the expenses. When people feel like their money is not going far enough, they sometimes make poor choices in order to maintain the lifestyle they’ve grown accustomed to. Employees are not immune to this effect, either. In fact, employee theft will increase at the same rate as shoplifting, if not more.

Next, retail sales often suffer because people have to offset their own expenses, like increased gas, food, and utility prices. So, they spend less on non-essentials in order to be able to pay for the “must have” things like food, electicity, etc.

Either of these situations affects shrink. If theft increases, that means more dollars lost. Since shrink is a percentage of sales, when sales are down, the same amount of shrink will mean a higher percentage over a period when sales are up.

Imagine what happens when both are combined. Higher shrink dollars combined with lower sales can significantly impact shrink numbers, causing big swings from last year to this. That is why it is so important to protect your company against losses, while maximizing every sale. It’s a tough balancing act, to be sure. The net result of failure is higher shrink and reduced profits. The reward of success is increased profits even though sales may be softer than normal.

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