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April 7, 2024
$142B in losses due to inventory shrink in 2023

In 2023, U.S. retail losses from inventory shrink will hit $142 billion, a 25% increase from the previous year, due to theft, damage, and inaccuracies. Retailers, stressing on strategic investments like automation and data verification, aim to mitigate this growing challenge.

U.S. retailers absorbed an estimated $142 billion in losses due to inventory shrink in 2023, up more than 25% from the previous year

In 2023, the retail landscape in the U.S. was markedly impacted by an unprecedented surge in inventory shrinkage, with reported losses reaching an estimated $142 billion, a significant jump exceeding 25% from the prior year, according to insights from the National Retail Association. This surge not only reflects an ongoing trend of the past decade but also underscores the complexity of challenges retailers face beyond mere theft—encompassing losses through damaged goods and discrepancies in record-keeping.

Retail Inventory Stock Shrinkage 2019-2023*

Shrink is now one of the most frequently discussed topics among management.

The dialogue around shrinkage has, consequently, ascended to a principal concern among retail executives, prompting a reassessment of financial strategies towards mitigating these losses. Retailers, acknowledging the diversity in calculating shrink, remain reticent on the precise financial toll it exacts on their operations.

"We have to make decisions on how much we would invest and does that mitigate the risk and, like any other investment, how much return do you get? If I can invest a few extra million dollars, but it can save me $10 million or $20 million of shrink, then we will make that investment.” - Tractor Supply’s CFO, Kurt Barton

Investment in loss prevention should emphasize a calculated approach to expenditure in security measures against the anticipated savings from reduced shrinkage. This strategic investment mindset reflects a broader industry effort to navigate the financial implications of shrink, balancing the cost of preventative measures with the potential for significant savings, and underscores the critical, ongoing evaluation of loss prevention tactics within the retail sector's financial planning.

Embracing Automation and Data Analytics for Effective Shrinkage Control

Automation technology, equipped with real-time data analytics, can play a critical role in identifying and mitigating shrinkage causes promptly. By ensuring data is consistently updated and accurately reflects inventory status, retailers can significantly reduce losses attributed to theft, damage, and record discrepancies. This technological investment not only aids in loss prevention but also provides a high return on investment by safeguarding against future shrinkage, making it a cornerstone in the evolving strategies of retail management.


National Retail Federation - Security Survey Report 2023 - Sep 26, 2023 -

The Wall Street Journal - As Retailers Cite Rising Theft and Shrinkage, Analysts Want More Details - Jan 9,2024 -

James B.

Passionate reader | People person | The one behind All dad jokes
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