Inventory shrinkage is a reduction in physical inventory
caused primarily by shoplifting and employee theft. It
is most frequently reported as a percentage of total
annual sales. To put it more simply, inventory shrinkage
is the decline of an item’s quantity on hand.
Inventory shrinkage usually falls
into four main categories:
~Checking account purchases.
-Accounting for everything that customers buy (ex.
checking for items inside other larger items).
-Keeping a close eye on suspicious customers.
Communicating on the radio of a “Code 4” situation.
~Check in merchandise.
On every budget, the company writes off a certain
percentage of sales for unknown losses such as
shrinkage. In terms of ACE Hardware, the percentage is
two. In terms of Ben Franklin Crafts, the percentage is
Shrinkage Best Practice
~An item is broken in the store and discarded.
-When a broken item is found in the store, initiate
physical inventory to change the count and log to
~An item was temporarily borrowed for a store display
and was not accounted for in the system.
-Establish and use a house charge account for
~A customer shoplifted an item from the store.
-When it is discovered that an item has been stolen,
initiate physical inventory to change count and log to
~A customer entered the store empty-handed, brought an
item from the shelf to the point-of-sale and returned
-Always handle returns at the front of the store.
Returns without a receipt should be approved by a
manager or head cashier.
~A cashier created fictitious returns and pocketed the
-A manager or head cashier must approve returns
without a receipt.
Accessing Loss Prevention Services
~Log on to ACENET
~Click on the News & Info tab.
~Click on Ace Communities.
~Click on Loss Prevention Services, Inc. under