FAQs

What’s the problem with using this term?

Beyond an ongoing lack of agreement about an industry-wide definition for shrink or shrinkage, which makes efforts at benchmarking deeply flawed, critics of the term argue that three major changes in the world of retailing mean that it is increasingly an unsatisfactory way to understand and describe the losses experienced by retailers. The first is the growing complexity of the retail industry – when the term was first used in the 1860s, retailing was a relatively simple process – counter-based service with little consumer interaction with the product. Fast forward 150 years of more and retailing is a profoundly different business – online, self-selection, self-scan, vast and complex supply chains to name but a few of the changes. Secondly, the range of risks faced by retailers has changed dramatically since the term shrink or shrinkage was first used – theft of products by customers is now but one of a welter of issues that retailers have to manage, such as fraud, violence, counterfeit, product contamination, cash loss, margin erosion, to name but a few. Finally, retailers now have a much wider and deeper pool of business data to draw upon to understand how a range of losses are affecting their organisation than when the term shrink or shrinkage was first coined. So, taken together, the incredible growth in the complexity of retailing, combined with a vastly more broad ranging risk landscape and capacity to better measure and understand that landscape, increasingly means that the rather one-dimensional measure of loss offered by the term shrink or shrinkage, is seen by some as no longer fit for purpose.


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