Loss Prevention in 2024: Leveraging Effective Inventory Management to Overcome Shrink Challenges

Retail shrink – and theft in particular – has continued to prove to be one of the most damaging factors in retail losses over the past year. According to NRF’s 2023 National Retail Security Survey, the average retail shrink rate last year increased to 1.6%, up from 1.4% in 2022.

With shrink rising in 2023, retailers across the sector are determined to overcome the issue in 2024. If they can improve their loss prevention practices – both across supply chains and in-store – retailers can minimize the financial impact of shrink, improve customer experiences, and drive overall business growth. In order to achieve this, many are turning to technology investment.

The Impact of Shrink on Retailers 

Occurring when companies lose inventory from causes other than sales, shrink will never completely disappear. A challenge that has remained prominent for decades within the sector, the current economic climate has only emphasized the negative impact shrink has on a retailer’s bottom line. 

A major contributor to rising shrink challenges is the shoplifting epidemic plaguing the retail sector, which accounts for 65% of total retail shrink. Whilst retailers are implementing measures to combat the issue of theft, they also need to take a holistic view of all factors affecting inventory loss, such as administrative errors, damaged goods and vendor fraud, and execute a strategy that works to protect the bottom line from all variables. 

New technologies and predictive analytic tools are assisting retailers in pinpointing individual causes of shrink on both the shop floor and within the supply chain. Armed with the ability to view stock information from across the organization in real-time, retailers can understand the root causes of their shrink issues and take steps to prevent them. 

Inventory Management Technology

Establishing dynamic inventory control systems allows retailers to access real-time data of the store’s inventory, enabling them to have full visibility and control of items across all retail channels. With the reduction of manual handling of stock levels, retailers can minimize the risk of human error within inventory management, further benefiting overall accuracy and reducing the opportunity for shrink.

Providing full control across retail channels, inventory can be tracked and the use of predictive analytics allows retailers to leverage a range of historical trend data to gain a full understanding of factors impacting shrink levels. With inventory levels accounted for with an efficient management solution, stores are able to streamline operations while gaining crucial insight into stock levels.

Having access to the right inventory management software and solutions is essential for retailers to maintain an accurate and clear view of inventory across their supply chain. This enables them to consistently manage operations across all channels and reduce the impact of rising shrink challenges.

Introducing RFID to Reduce Shrink 

One technology that is also playing a key role in improving loss prevention is item-level RFID. The technology is giving retailers the ability to streamline operations, while also providing further visibility to the factors contributing to loss. By empowering retailers with clear visibility of all products, tagged at item-level from the manufacturing stage through to sale, items can be tracked in real-time with high-quality accuracy. 

Deploying RFID solutions provides retailers with the ability to identify specific missing items, and track their history of movements across the retail chain. This allows them to gain a clear indication of where stock is lost, enabling retailers to take appropriate action in mitigating shrink.

Shrink Prevention in 2024

As retailers continue to face the challenges of remaining profitable in a highly competitive industry, they must ensure that they are deploying the right technological solutions to prevent inventory shrinkage tackle the shrink crisis.

Interested in hearing how Teamwork Commerce can help your retail business minimize shrink? Please get in touch.