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How Are You Calculating Your Stores Shrink?

Posted on 3/10/15 9:45 AM

“Shrink” is a common term in the retail world. It is a term for the calculations that demonstrate the loss of merchandise in relation to our total inventory sales. We say “calculations,” plural, because there is some flexibility in how it is calculated and the exact nature of the relationship between those items lost and those items sold. Most loss prevention professionals prefer to discuss shrink in terms of loss as a percentage of retail sales, while many finance professionals like speaking in terms of true “cost.” In truth, as long as the reporting method remains consistent from year to year, the three accepted methods of Shrink calculations are all created equal. 

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Topics: loss prevention, Calculating Shrink, LP 101, Shrink

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