We often hear crazy stories about how people manage to steal stuff from stores and sneak away. There was once an incident reported on how a ‘well-known personality’ was caught shoplifting a dozen handkerchiefs from a store in France! Well, although this might sound funny, the loss faced due to retail theft is no funny story.

In the retail world, we use the word ‘shrinkage’ to describe the reduction in inventory due to varied types of theft including shoplifting, employee theft, administrative errors or vendor fraud.

According to National Retail Security Survey on retail theft, retailers lose 2% of their sales due to all the reasons mentioned above. This 2% amounted to almost $44 billion in 2014.

Now that’s not a small amount. Huge losses are incurred by retailers every year due to these and hence, we need to understand how to keep away from thefts and improve security.

This doesn’t mean we start looking at all customers and employees with doubt – our default mode must be trusted to ensure team and customer happiness. However, it doesn’t harm to keep your eyes open to what’s happening around.

You may also want to read: What is inventory management all about?


Shoplifting was lagging behind employee theft, but it recently moved to number one position for retail shrinkage. Retailers report that 0.6% of their inventory is lost due to shoplifting. You must have even heard of ‘celebrity shoplifters’. There have been several cases even where notable personalities in the world have been caught shoplifting.shoplifting

There has even been an incident reported from Pittsburgh, Pennsylvania that the Dimperio’s Market, the only full-service grocery store in the Hazelwood neighborhood closed down because of shoplifters.

Strict measures have to be taken to cut down the percentage of shoplifting. Some of those measures could be:

  1. Catch the signs

Be watchful of people who seem to show the following signs:

  • Avoid eye contact
  • Keep going in and out of the store without purchasing anything
  • Wear bulky clothing (like jackets, coats, etc.)
  • Enter with a large group
  • Keep lingering in a spot where it’s difficult for employees to monitor
  1. Train your staff accurately

According to a global study conducted by NRMA ( National Resource Management Area) in 2008, shoplifters are 68% less likely to commit the theft if they are greeted soon after they enter the shop. So, the store personnel must be trained to monitor the customers closely and stay with them as much as possible. Many big retail companies like Walmart, Zellers, etc. have their store detectives dressed in plain clothes and acting as if they are real shoppers. This way they succeed in catching the shoplifters.

  1. Use in-store analytic tools

CCTV ( Closed-circuit television) and EAS( Electronic Article Surveillance) can be used to detect shoplifting. CCTV requires constant human monitoring. EAS refers to the electronic tag on the merchandise which causes an alarm to sound when the store is excited. Foot traffic information coupled with inventory and POS data can help you detect discrepancies or unusual inventory patterns.

  1. Put up a board saying “Shoplifters will be prosecuted”.shoplifting

Employee theft

While 38% of retail shrinkage was accounted to shoplifting in 2014, 34.5% was accounted to employee theft.  Following these steps will help you reduce employee theft at your store:

retail pos system software

Hiring the right people would be the most important step toward avoiding employee theft. Don’t miss out on calling references, running background checks and having a detailed interview before hiring people.

Perform regular audits

Going through your company’s financial statements regularly will give you a clear idea of discrepancies, if any. This will also create a kind of alert situation among the employees too.

Have a robust inventory tracking system

Use a POS system that tracks inventory automatically, so that you can get real-time information on your overall stock.

Administrative Error

16% of retail shrinkage occurs due to this type of error. Simple pricing mistakes due to markups or markdowns can cause retailers huge loss of money.  So, the most important thing you can do is to have an automated system that integrates your sales management with good accounting software so that such kind of errors can be entirely removed.

Vendor fraud

Although accounting only for almost 7% of retail shrinkage, vendor fraud cuts into a retailer’s financial account quite a bit. This happens mostly when outside vendors come to the store to stock inventory. The possible things they might do is failing to provide as many units as invoiced or stealing stuff.

You can implement the following ideas to cut down on vendor frauds:

Do not schedule multiple deliveries at once

This gives you time and space to focus on one vendor at a time.

Log all delivery and shipment details

Keep account of each and every small detail like time, quantity, and the person who signed for it, etc.

Make sure your store is completely secure and check on any action that might lead to losses at your store.

Having an inventory management system is considered to play a good part in cutting down different types of errors that might lead to retail shrinkage. When your inventory management system is integrated with good accounting software, it becomes all the more efficient.

Primaseller provides retailers a software platform that automatically manages and updates inventory across all your channels of sale even while you are not monitoring. It is also integrated with good accounting software like Quickbooks and Tally so that you get accurate, real-time financial accounts.

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