By: Erica Susi and Katheryn Stanwick
Published: October 10, 2024 | Updated: October 10, 2024
Read time: 3 minutes
Retail shrink is on the rise and it's time to take action.
But what exactly is retail shrink?
Shrink is product disappearing from the store without being sold, whether driven by customer theft, employee theft, fraud, cashier errors, administrative errors, product damage or other factors.
Mastercard’s Jenni Jones discussed best practices for retail loss prevention with James Spencer, Director, Asset Protection Systems and Technology at Walgreens. During the conversation, Jones and Spencer explored the evolution of shrink in recent years and impactful strategies for reducing it.
Let’s look at the key takeaways.
Why has retail shrink increased in recent years?
Before the pandemic, just a sliver of the consumer base used curbside pickup programs. When COVID appeared and social distancing was implemented, retailers saw a surge in buy online, pickup in-store (BOPIS) orders. The volume of people picking up orders in stores without showing IDs drove a surge in digital fraud.
Years later, BOPIS is still popular with consumers who want to save time, get a product sooner and avoid delivery fees. Today, many retailers require consumers to show some form of ID when picking up an order, yet the complexity of managing both online and in-store inventory still results in administrative errors for some.
Key Takeaway: Today’s digital world is driving a rise in retail shrink.
Shrink control and the customer experience
Reducing retail shrink is critical for your bottom line. However, it’s important to consider the impact of shrink control measures on your customers and employees.
For example, let’s say a shopper walks into your store to purchase new earrings. She moves into the jewelry aisle and is surprised to see that you’ve changed your setup: earrings are now stored in locked cases.
In this scenario, locking up products may inconvenience shoppers who want to try on the product immediately as well as employees who now need to provide manual access. Although having a product locked up may deter some sales, it can be better than the alternative of having it not locked up and empty on the shelf.
Key Takeaway: Plan your shrink control solutions carefully. Different store types or locations may require unique approaches, so avoid oversimplifying your strategy. Remember: the goal is to reduce shrink and still deliver a high-quality customer experience.
How to find the best retail shrink strategy
To minimize shrink, many businesses are trying diverse strategies:
- Changing employee training
- Adding labor hours
- Increasing security
- Modifying product assortments
Maybe you’ve already tried these strategies.
To truly understand which is most effective, it’s important to test your strategy in market. With this “test-and-learn" approach, you can measure the most effective aspects of a new strategy, reveal which types of stores respond best and identify how to target rollout to maximize return on investment.
In our webinar, James Spencer illustrated how Walgreens uses data and analytics to target its investments and measure the results.
Key Takeaway: Testing can help you determine which strategies are most effective.
Interested in learning more? Watch the on-demand webinar today to see how you can minimize shrink, improve the customer experience, and drive profits.
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