Shrink and loss prevention guides
Retail shrink and loss prevention guides: find where the loss starts
Shrink is not always theft. Stock and cash also go missing through receiving mistakes, register errors, damage, bad counts and item records that were wrong from the start. These guides are about telling those apart before deciding what to fix.
Written for owners and managers, not for analysts.
Is retail shrink always caused by theft?
No. Theft is one cause among several. Short deliveries that were never checked, refunds and voids nobody reviews, damaged or expired stock, counts that were wrong and item records set up badly all produce the same symptom: less stock or cash than the records say there should be. The useful first question is where the gap appears, not who took it.
Variance concentrated in one department usually points at receiving or transfers rather than at theft. Losses that follow one employee’s shifts point at the register. The pattern is the evidence, and it is only visible if counts, deliveries and register activity are recorded.
- Receiving firstIf a delivery was never checked, the count is wrong before anybody miscounts.
- Counts by line, not by totalThe corrected total tells you less than the difference does.
- Exceptions reviewed on a scheduleRefunds, voids, discounts and no-sales leave a trace.
- No accusation without a recordUntraceable is not the same as dishonest.
These are operational guides, not a specification of what any particular system does, and not an investigation procedure. Where theft is suspected, follow the store’s own policies and the law.
The guides
What the shrink guides cover
Six places a loss can start, and what to check at each.
Receiving
Purchase orders and receivingQuantities and costs checked against the order before stock is put away, so a short delivery is caught at the door.
Stock counts
Stock takeCounted by department between deliveries, with the variance read by line rather than the total corrected and forgotten.
Refunds, voids and discounts
Cash control guidesReviewed by employee and by shift, with permissions deciding who can make each one.
Cash drawers
Cash managementCounted against a recorded figure each shift, so over and short can be measured at all.
Item records
Item file setupBarcodes, prices and departments set up correctly, because a wrong record produces shrink that never physically happened.
Reporting
Shrinkage reportingA short list of reports read on a schedule, so a pattern is noticed while it is still small.
Signs shrink is starting somewhere specific
-
One department is always short
The loss looks like theft and gets investigated as theft.
Check receiving and transfers for that department first.
Stock take -
The count is corrected and nothing else changes
The same variance appears next time.
Read the variance by line and follow one line back to its cause.
Shrinkage reporting -
Refunds rise without sales rising
Money leaves the drawer with a receipt that looks legitimate.
Review refunds by employee, and restrict who can make them.
Cash control guides -
Deliveries are put away before they are checked
Shorts and cost changes are invisible, and the count is wrong before anybody miscounts.
Check each delivery against its order before it reaches the shelf.
Purchase orders and receiving
Shrink and loss prevention questions
What reports help with loss prevention?
Count variance by line, deliveries received against orders, refunds, voids, discounts and no-sales by employee, and drawer over and short by shift. Read on a schedule, that set points at where to look.
How do I tell theft from a receiving problem?
Look at where the loss sits. Variance concentrated in one department usually points at receiving or transfers; losses that follow one employee’s shifts point at the register. Neither is proof, and both are a place to start.
What can a POS system do about shrink?
Make it visible and attributable. In Infinity, counts show variance by line, deliveries are received against the purchase order, and voids, refunds, discounts and drawer openings are recorded against the employee. It cannot stop a loss; it shows where one happened.
Why do wrong item records look like shrink?
Because a sale rung against the wrong item takes stock off the wrong line. The count then finds one line short and another over, and neither was stolen.
See a variance followed to its cause
Ask to see which lines a count found wrong, then the receiving history for one of them.