If you were paying attention to retailers' earnings reports in 2023, you undoubtedly heard the term “shrink” cited as a key factor contributing to margin erosion and poor earnings performance. Shrink is the industry term for inventory loss often attributed to theft, damage, or errors. Once simply considered a cost of doing business, shrink resulted in retail profit losses exceeding a staggering $100 billion in 2022.
What’s more problematic, the trend of shrink appears to be far from reversing course, with losses more than doubling over the past five years. In an industry where margins and profitability are already under significant pressure, the rise in retail shrink is capturing the attention of all levels within retail organizations.
