How to Fight the Impact of Shrinkage on Your Retail Business

Shrinkage is a problem nearly every retail business faces, and unfortunately, it’s more or less unavoidable. Inventory shrink can happen due to hundreds of different factors, and even the most diligent and watchful staff can’t keep an eye on every single item 24/7. That being said, loss prevention efforts do help reduce the amount of inventory shrink by a significant amount; however, that amount does depend on the individual business.

Knowing the full impact inventory shrink has on your retail business means having the right systems in place to monitor your assets. From there, the data gathered can be used to identify areas where items are disappearing, as well as the unique reasons for it. Before we get into how to properly monitor your inventory and tackle shrinkage head-on, let’s take a closer look at what retail shrink is exactly.

The Most Common Ways Shrink Occurs

As you might experience, shrink occurs in a few fundamental ways. Taking note of which ways shrink tends to take place around your business can help you build the right defenses necessary to bolster your loss prevention efforts.

Theft

For most retailers, both large and small, external theft is the primary cause of inventory shrinkage. It can occur in various forms and at various scales, from the opportunistic or occasional shoplifter to entire organizations of people. Organized Retail Crime (ORC) is an increasingly difficult problem to manage for many major retailers, especially as criminals are becoming more coordinated in their efforts and, in certain cases, more violent. However, with powerful video security tools, cooperation with local law enforcement, and proper employee training, external theft can be reduced considerably…

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Technology, Legislation & Law Enforcement Partnerships
Securing the Storefront: How Companies are Tackling Increasing Retail Theft
Retail crime, and specifically organized retail crime, is on the rise in major markets throughout the United States. This surge in theft, coupled with increased shrinkage and operating costs, has retailers and landlords grappling with the question of how to address this issue effectively without majorly impacting their bottom line. Solutions to this problem include creative uses of technology, legislation, and partnerships with law enforcement.

Many retailers are coming up with creative, cost-effective ways to efficiently prevent retail theft. For example, one of TJX’s several new antitheft measures to mitigate retail theft, includes having some employees wear body cameras similar to those police wear. Taking another approach, it was reported in June that Target has lowered the threshold for employees to step in and prevent shoplifting from $100 to $50, in an attempt to stop retail crime.

Other companies are turning to AI. In the past year, the use of AI and technology in this sector has expanded dramatically. A French company, Veesion, offers AI software that can be incorporated into many existing camera systems in retail stores. This technology detects suspicious body activity in real time, allowing retailers to confront shoplifters with real-time proof. As of December 2023, Veesion reports use in over 350 stores across the United States.

Beyond looking to mitigate issues at individual locations, it is clear that the industry is concerned about this trend overall. In the past year, many states have attempted to introduce legislation to combat the rise in retail theft. California and Ohio, among other states, have active bills in their legislature to combat retail theft, while Florida and Vermont have signed new public safety laws into effect in 2024 with an eye toward retail theft.

We are also seeing retailers working together with local law enforcement to open a dialogue about retail theft. For example, in March, the Retail Industry Leaders Association paired with the National District Attorneys Association for “National Store Walk Month”, which has led to local district attorneys meeting with local retailers to discuss the impacts of retail theft, and to work towards solutions. As of late 2023, over 80 of these store-walks between retailers and district attorneys had taken place across the country.

Retail theft will continue to fluctuate over the next year, but the tone set by retailers is clear – something needs to change, and whether through the use of monitoring technologies, artificial intelligence, or lobbying efforts in government, retail will continue to fight to curb shrinkage from retail theft. If you are considering these types of efforts in your locations, it is prudent to engage legal counsel to evaluate any potential concerns. jdsupra.com


California's ORC Fight By The Numbers
$45M in Stolen Goods Recovered - 2,600 Investigations - 2,800 Arrests

CA Gov Gavin Newsom Touts Big Expenditures to Crackdown on Retail Theft
In 2024 California Highway Patrol recorded 717 arrests for retail crime, and California Gov. Gavin Newsom insists it’s a result of his initiative to reduce retail crime—including new measures to crack down on property crime and the state’s unprecedented police funding to local communities, including Orange, Riverside, Los Angeles and Bay Area counties.

Newsom, according to the governor’s office, this week said, “California continues to crack down on organized retail crime through coordinated efforts up and down our state. We’re taking down criminal enterprises in record numbers and securing accountability and justice for the businesses and communities hurt by these crimes.”

The governor claims the California Highway Patrol has recovered stolen items valued at nearly $45 million since its creation in 2019. Since then it has conducted 2,600 investigations, and made more than 2,800 arrests.

Since 2019, California has invested $1.1 billion to help local governments hire more police, said the statement, and in 2023 Newsom introduced an annual 310 percent increase in funding targeting organized retail crime and special operations across the state as a part of the Real Public Safety Plan.

This is the biggest increase in funding for investigating retail crime in state history according to the governor’s office.

Gov. Newsom said the state has distributed $267 million to 55 areas to combat organized retail crime, with the funds used to hire more police, make more arrests, and secure more felony charges against suspects.   davisvanguard.org


Retail Theft Data Is Hard to Come By
PD Editorial: California voters lack data on retail crime debate
California voters will decide in November whether to toughen up the state’s theft laws. They’ll hear a lot of arguments from both sides, but what voters really need to make an informed decision is some reliable data. Unfortunately, such data is in short supply.

No state agency collects all the local crime reports and presents them usefully to the public, lawmakers and researchers. Worse, many victims of theft don’t bother reporting incidents because they figure police won’t or can’t do anything about it.

That should spur state and local agencies to improve data collection so Californians and their leaders have an honest assessment of retail theft, its causes and its impact. The commission recommended that the state needs to fund such data gathering.

Further, policymakers should collaborate with universities and nonpartisan research institutions to examine retail theft in depth, including preventive measures and effectiveness, underreporting of incidents, economic impacts, public perceptions and fencing of stolen goods.

Data won’t arrive quickly enough for November, though. Neither voters nor politicians will have better data in hand before facing an anti-crime initiative on the Nov. 5 ballot.

The measure, Proposition 36, is backed by retailers, the Republican Party and law enforcement. Sonoma County District Attorney Carla Rodriguez, who has received a $2 million state grant to prosecute organized retail theft, told The Press Democrat last year that her office had seen an increase in smash-and-grab robberies and juvenile crimes since passage of Measure 47.

Limited data is better than no data. Things aren’t as bad as a lot of people think, but there’s still plenty of reason for concern. pressdemocrat.com


Is 'Broken Windows' Policing Bringing Down Crime in NYC?
Crime in NYC continues drop in police commissioner’s first year, though critics say that has come at a cost
A year after Police Commissioner Edward Caban was sworn in as the first Latino to head the NYPD, serious crime continues to drop in the city — though some critics say that success has come at a cost.

Through July 14, there have been 195 murders in the city, 15% fewer than the 230 in the city last year at this time. And the 580 people shot is a 9% drop from the 638 last year, with police seizing more than 3,600 guns this year alone.

On top of that, subway crime, which spiked sharply during the pandemic, is down 15% since last June, with six straight months of double-digit decreases.

Joseph Ayala, president of the NYPD Hispanic Society, a fraternal group, also applauded Caban for “increased diversity and inclusivity within the department, and improved community relations which have helped bridge the gap between law enforcement and the communities we serve.”

But Patrick Hendry, who heads the largest police union, the Police Benevolent Association, said even more could be accomplished if cops weren’t leaving the force in droves, in part because he says they are being worked to exhaustion. The NYPD spent more than $100 million more than its allotted overtime budget for the fiscal year that ended June 30.

Those stepped-up crime-fighting efforts have also come at a cost in the city’s neighborhoods, advocates say.

A supervising lawyer for Latino Justice for PRLDEF, a civil rights organization, said Caban has not kept his promise, clearing too many officers accused of misconduct and stepping up the department’s so-called “broken windows” policing tactics. nydailynews.com


Migrant Crisis Fueling Shoplifting in NYC?
NYC store owner fears business ‘won’t survive’ rampant shoplifting that has occurred since start of migrant crisis
The owner of a Queens store located within 13 blocks of 17 migrant shelters says his business “won’t survive” the rampant shoplifting it has had to endure since their arrival. Chris Sciacco, the owner of Kaiya’s Pallets at 36-37 31st St. in Long Island City, told The Post his store is targeted as many as six times a week by migrant thieves.

With no end to the rampant theft in sight, Sciacco recently started a “Wall of Shame” where he posts photos of thieves and notes what they stole.

“It just goes to show that, frankly, people don’t care anymore,” said store manager Bobby Valiente, who showed The Post the baseball bat he is now keeping behind the cash register just in case — but, luckily, has never had to use.

As of Friday, there were a dozen perpetrators featured on the public-facing wall. nypost.com

 
Has CHP's Organized Retail Theft Task Force made an impact?

Rape surges 11% in NYC — as bail reform, vulnerable migrants, depleted NYPD create perfect crime storm
 

Monitoring Store Shelves in Real Time
New robotic capability lets retailers remotely monitor store shelves

Simbe Robotics’ tool allows personnel to see conditions in stores on a mobile device using imagery from the company’s autonomous aisle-scanning equipment.

Simbe Robotics has rolled out technology that allows grocers to remotely monitor inventory levels, product layouts and other aspects of their stores visually using imagery and data captured by Tally, the company’s aisle-scanning robots, according to a Tuesday announcement.

The system, which is available on mobile devices and desktop computers, provides high-definition snapshots and time-lapse footage of store shelves at various heights.

Simbe has also introduced mobile apps that allow store staff and managers to access and interpret data the Tally robots capture using their smartphones, reflecting the company’s sense that retailers are becoming more dependent on data analysis capabilities.

The new capabilities are designed to broaden the utility of Simbe’s Tally robots, which the company has deployed with a number of grocers, including BJ’s Wholesale Club, SpartanNash, Schnuck Markets and Wakefern Food Corp.

As they autonomously move around stores, the robots capture images of products, providing retailers with the ability to track inventory placement, gauge how effectively products are organized and get an early warning about items that are running low. retaildive.com


How the Pandemic Changed Retail Inventory Management
Why you need a war room for post-pandemic inventory management
The ups and downs of the pandemic exposed a key flaw in retail: the industry’s overreliance on long planning cycles.

Many retailers found themselves caught on the back foot during the pandemic, scrambling to implement omnichannel strategies like curbside pickup and trying to respond to widespread supply chain disruptions and shortages. They ramped up production, only to find themselves with too much inventory as inflation surged and consumers once again cut back on spending.

It had become crystal clear—across industry segments, regardless of the size and maturity of the organization, retailers simply didn’t have the fundamentals in place to react as quickly as the market demanded.

Increasingly, future-looking industry leaders are looking to reinvent how they track and manage inventory management in a fairly non-technological way: by creating a "war room."

The Role of a War Room in Reinventing Inventory Management

In retail, the war room is increasing in popularity due to its ability get answers in real time to a wide variety of business-critical questions, including: How do sales break down by channel? Where is product sitting? Do we have the right inventory in place to meet demand? What’s within our control—and what isn’t? What levers can we pull today to use our inventory more effectively? chainstoreage.com


Best U.S. Retailers
Von Maur, Costco, Trader Joe’s among U.S. best retailers — by category
Quality products, reasonable prices and excellent customer service — these are the attributes that allow retailers to succeed.

That’s according to Newsweek, which partnered with Statista to release the third annual ranking of "America's Best Retailers." More than 7,000 shoppers were surveyed for their opinions on retailers spanning 40 industry categories (such as apparel, electronics and supermarkets), resulting in a ranking that recognizes the 200 best places to make a purchase, according to Newsweek.

• Top Apparel Store: Tommy Bahama
• Top Convenience Store: Buc-ee's
• Top Department Store: Von Maur
• Top Discount Supermarket: Trader Joe's
• Top Home Improvement: Tractor Supply

Click here to see the full list for each category. chainstoreage.com


Report: Conn’s to close 100 stores, considers bankruptcy

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Last week's #1 article --

Dollar General's $12M Safety Penalties Make More Headlines
OSHA Settles with Dollar General Requiring Corporate-wide Safety Investments

The company will pay $12 million in penalties and implement corporate-wide changes.

On July 11, OSHA announced it entered into a corporate-wide settlement with Dollar General and its retail subsidiaries to make significant workplace safety improvements in stores nationwide. The company had been hit with $15 million in fines, in 2023, as EHS reported.

Dollar General agreed to pay $12 million in penalties and implement corporate-wide changes that make the safety of its employees a priority. These improvements include the following:

• Establishing and maintaining an expanded safety structure and a robust safety and health management system, including hiring additional safety managers.

• Significantly reducing inventory and increasing stocking efficiency to prevent blocked exits and unsafe material storage.

• Providing safety and health training to both leadership and non-managerial employees.

• Developing a safety and health committee and encouraging employee participation.  ehstoday.com