According to the study, shrink is on the rise in most countries with increases noted in shoplifting, employee theft and organized retail crime. The lowest shrink rates were recorded in Japan (1 percent of retail sales), followed by Hong Kong, Australia and Germany (1.1 percent). The U.S. came in at 1.5 percent of retail sales. The highest rates were recorded in Brazil and Mexico (1.6 percent). As per Euromonitor International, shrink is a multi-dimensional threat for retailers across the globe, with shoplifting and employee theft, including organized crime, on the rise. Growing shrink concerns have put loss prevention high on the agenda of retailers and companies are keen to invest in effective and proven loss prevention methods.
Given these concerns, it is critically imperative for a cost effective solution that companies should adopt. While I was going over a few articles on inventory management, I came across a useful technique called inventory sampling which can be used to prevent these issues. Inventory sampling replicates the traditional counting and stocktaking mechanism. Through using the inventory sampling method you only need to count a small number of your most expensive items. All the other items are then distributed into several zones, from which samples are taken. The sample results are then extrapolated to the respective zones. By doing so, you are only required to count between 5 and 15 % of the actual stock. In automated warehouses, where inventory reliability is naturally very high, you could count as few as 30 items through utilizing a slightly varied method.
Having said the above, we do see that inventory sampling is one of the most efficient and cheapest ways to handle the issue of shrinkage. But one thing that we all will have to contemplate about is: Will companies be willing to adopt this technique when there’s a wide range of available technologies like RFID or security cameras to prevent disappearance of goods?