Retail shrinkage is a common practice in retail stores. It includes factors such as employee theft, shoplifting, vendor fraud, admin errors, etc. It becomes difficult for retailers to identify shrinkage and work on retail loss prevention. Alasdair McKichan; President Retail Council of Canada rightly states that,

“Shrinkage is the single greatest threat to profitability in our industry.”

A high shrinkage rate results in the loss of profits. Therefore retailers need to make in-time precautionary measures for retail loss prevention and to combat retail shrinkage. As a result, this shall save the business from losing its profitability.

Retailers need to be more attentive and alert and hence should improve the store’s security. They should adopt such ways that help them with retail loss prevention and reduce shrinkage. A few of these ways have been listed below.

Ways to Reduce Shrinkage and Prevent Retail Loss

Focus on Employee Accountability

It becomes difficult to retain employee accountability in the retail world, due to continuous employee turnover. Constant turnovers can lead to high rates of employee theft which is one of the major causes of retail shrinkage. Therefore, employee accountability is one of the most effective ways to monitor and reduce shrinkage. In other words, retailers need to be vigilant and make employees aware that they are being observed. As a result, the staff will be cautious and hence shall result in the reduction of internal theft. Certainly, it is a productive step for the retailers because it helps them track cash management ways. Moreover, it keeps retailers up to date about the sum of cash and daily transactions.

Install Security Signs

An economical way to detect and avert shoplifters is to install signage in the retail store. Warning signs should be fixed at several places in the store to keep the shoplifters alert and inform them about the consequences they will have to face in case of shoplifting. Through these signs, the retailers need to clearly inform the shoplifters that the store’s policies are very strict when it comes to theft and hence there shall be no leniency towards such transgressors. In short, retailers must prosecute instantly so that the shoplifters, as well as the other visitors and employees, are witnesses of the strict action that the retail store takes and the strict policies that it follows.

Install Surveillance Cameras for retail loss preventions

Consider installing surveillance cameras to prevent theft activities. Consequently, it shall allow retailers to monitor retails store activities regularly and continuously. Moreover, retailers will have recordings that will enable them to access impermissible and intolerable activities. There is also a possibility that retailers can integrate their cameras with their POS system and several other loss prevention programs. By combining various factors together in one system, retailers will find it more convenient to track people’s movements and actions during shopping.

Security Mirrors

A budget-friendly substitute for surveillance cameras is security mirrors. Retailers can use these security mirrors as an effective tool to detect shoplifting and other doubtful actions. Retailers need to ensure that there aren’t any blind spots in their store for retail loss prevention. In case, there are any blind spots retailers can install security mirrors to observe and monitor these areas. Such areas that are blocked by shelves need to be made visible through these security mirrors. Moreover, these security mirrors are easily available for purchase.

Effective POS System fot retail loss prevention

A good and effective Point of Sale system allows users to restrict access to people. It allows user permissions to access it. As a result, these user permissions can help in retail loss prevention. In addition, retailers need to be aware of the voided sales because it is the simplest way to steal stocks.

Create a Retail Loss Prevention Environment

Working together prevents retail loss. By making your staff aware of the retail loss and by persuading them to take care of such negative actions, retail loss and shrinkage can be kept under control. When the staff will be considered confidants of retailers, they will make sure to help retailers with the external as well as the internal theft.    

Use Automated Cash Management

Another very effective way to reduce shrinkage is to use Automated Cash Management technology. The Automated Cash Management technology reduces the risk of theft of cash by employees or outsiders. Further, it allows retailers to track cash flows. Major automated cash management procedures include transaction processing, counting currency and storing cash safely. Therefore, by investing in an automated cash management technology, retailers can secure their business and hence prevent retail loss and shrinkage. 


The National Retail Federation states that the US retail economy suffered immensely in 2015. To clarify, the US Retail economy lost 45.2 billion dollars because of shrinkage. Therefore, retail loss prevention and shrinkage reduction require examination and vigilance on the part of retailers. They need to be aware of their daily store operations. Consequently, it will enable retailers a good insight into the malfunctioning of the retail store. Further, it will enlighten retailers to become aware of where things are going wrong and which areas need improvement. That is to say, the only way to reduce shrinkage is to identify its cause first and work towards its solution because “not controlling shrinkage is taking a shortcut to bankruptcy.” (John L. Pagliaro, President Dana Associates)

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