Retail shrinkage, the portion of your inventory that gets lost or stolen, is an issue all retailers face.

The main causes of retail shrinkage are employee theft and shoplifting. Employee theft is something you’d hope wouldn’t be an issue in a small surf retail business, but studies consistently show that employee theft accounts for over 40% percent of all shrinkage. Shoplifting makes up nearly one-third of shrinkage during the same year while the rest is due to poor inventory management, accounting errors and simple things like not cross checking stock and invoices which each delivery.


There is plenty of security technology available to deter shoplifters with security cameras and electronic surveillance tags and scanners the most prevalent. The tags and scanners alert staff to someone trying to do a runner with stolen goods while visible and obvious security cameras make would-be shoplifters think twice as they don’t know when they are being watched. Of course the cameras actually do work and allow staff to watch and record and theft. One of the best deterrents against shoplifting is good customer service. If staff are welcoming and acknowledge people as they enter the store then potential shoplifters are aware of your presence. Staff who stay behind the counter offer an opportunity for shoplifters, especially if the store isn’t open planned and has blind spots. They need to be on the floor and engaging with customers regularly.DSC_1645


The most sensitive shrinkage area is employee theft. When you employ someone there is an immediate assumption that the person is trustworthy. It’s not necessarily only disgruntled staff who steal, although motivated and fairly paid staff are less likely to feel they can justify stealing. Below are some of the ways staff contribute to shrinkage, some of which may not be seen as directly stealing from an employer, but do undermine the retailer’s bottom line.

  • Removing cash from POS terminals
  • Undercharging friends or family on sales made
  • Deliberately damaging stock so it can be bought on staff discount
  • Reducing or changing prices on stock for personal gain
  • Putting through extra items on sales undeclared
  • Falsifying refunds
  • Giving staff discount to friends
  • Removing stock after closing time.

Cameras above tills, exits and bag checks are ways to minimise staff theft. These may undermine the sense of trust with some employees, but most of those with nothing to hide understand such measures are not directed at them.