New research from Software Advice, a company that aids clients in technology purchasing, indicated that theft-related shrink is a growing challenge for small and midsize retailers.
In a survey, 68% of SMB (small/medium-sized business) retailers responding stated that they are experiencing shrink rates above the industry standard of 1.5%. External theft, including shoplifting, organized retail crime and fraudulent returns, gets predominant blame for accelerated shrink rates and marks a significant challenge for businesses with smaller margins and less sophisticated loss-prevention strategies. In all, 34% of SMB retailers pointed to a rise in shrinkage over the past 12 months, and 46% experienced more theft at their stores. As a result, among those retailers that have observed more theft, 88% maintained they now consider loss prevention a top priority.
Rising shrink is more pronounced in businesses operating 20 or more physical stores. So it may be that growing businesses with more public exposure need to anticipate losing more inventory and revenue to shrink as they scale operations.
Although external influences are behind a lot of the shrink retailers experience, operational factors contribute to the rise in shrink as well, particularly as related to employee theft, Software Advice pointed out,
To combat the problem, 54% of SMBs have installed or updated security cameras in the past year. Additionally, they have introduced new inventory management systems, reporting software, and training techniques that help them take a proactive, technological approach to the shrink challenge.
