What is Shrinkage in Retail? [MUSIC PLAYING] Professor Siegfried: Hello, Mindy. Can I explain any retail concepts? Mindy: Professor Siegfried, what does shrinkage mean in retailing? Professor Siegfried: Well, Mindy, shrinkage in retail refers to the difference between the amount of stock that you have on paper and the actual stock you have available for sale. In other words, it's a reduction in inventory caused by employee theft, shoplifting, administrative errors, supply errors, and supplier fraud. Mindy: Professor, how can you prevent shrinkage? Professor Siegfried: Well, Mindy, you can prevent shrinkage by increasing security in your store, monitor customers, employees, vendors, suppliers for suspicious behavior. Also, have accountability policies in place to reduce human error, and do regular inventory checks, especially when it comes to high theft items. Mindy: Thanks professor, for explaining retail shrinkage.