🧵 Understand and Act: What is Shrinkage and Why Does It Impact Your Business?
Shrinkage , the discrepancy between your book stock (what your records show) and the actual physical stock found during a stocktake, is much more than a simple accounting discrepancy. It is a net loss that directly erodes your profits. For retail businesses such as grocery stores, pharmacies, or hardware stores, it results in a significant reduction in profit margin and can seriously impact the overall profitability of your business.
The causes of this shrinkage are varied and often intertwined: shoplifting is frequently cited, but administrative errors, internal theft that can be difficult to detect, and product damages that have not been correctly recorded must also be considered. Precisely identifying these multiple sources is the first crucial step to implementing truly effective corrective actions and protecting your assets for the long term.
📈 The Traditional Calculation of Shrinkage: A Necessity and Its Limitations
The most traditional method for quantifying shrinkage is based on a simple formula and well-established formula: ( Opening Stock + Purchases during the period) – ( Closing Stock from the stocktake + Sales recorded) = Shrinkage . This calculation, while absolutely essential for accurate accounting and sound stock management, provides a valuable indicator but is, by its nature, fundamentally retrospective .
It allows a loss to be identified only after it has already occurred, often long after the events that caused it. Furthermore, without the support of more sophisticated analysis tools, it remains particularly difficult to attribute with absolute certainty the exact share of each cause (external theft, internal theft, administrative error, damages) in the total shrinkage amount. This approach, while essential, does not always allow for the identification of proactively genuine high-risk areas or specific suspicious behaviours to effectively prevent future losses.
📷 Optimising the Fight: The Valuable Contribution of In-Store Smart Cameras
Faced with the inherent limitations of the traditional calculation, in-store smart camera systems bring a true revolution to the approach to shrinkage. Thanks to real-time video analysis powered by Artificial Intelligence , these cutting-edge technologies can identify and flag suspicious gestures or abnormal behaviours , which are often precursors to an act of theft or a potential loss. They not only allow for more reactive action in the moment but also help develop a much deeper understanding of the dynamics of shrinkage within your establishment.
This technology helps to highlight hotspots – those specific areas of your store that are most vulnerable – as well as the most frequently targeted products . Thus, instead of simply identifying losses after the fact, you gain a preventative capability that is considerable:
- ➡️ Receive discreet alerts for quick and targeted intervention by staff.
- ➡️ Deter attempts through a technological presence that is visible and modern.
- ➡️ Collect information and evidence to better identify recurring theft patterns.
- ➡️ Optimise aisle layout and product displays to minimise opportunities for shrinkage.
✨ Oxania: Your Technological Ally to Reduce Your Shrinkage
In this quest to optimise and protect your margins, innovative solutions are emerging to transform shrinkage management. An advanced system for suspicious gesture detection , leveraging the power of Artificial Intelligence , can become a leading technological ally . It is specially designed to integrate with daily store operations, offering a detailed understanding of losses and, above all, the concrete means to address them effectively.
The main objective is to provide measurable benefits , going far beyond simple passive surveillance.
- ✅ A measurable decrease in the shrinkage rate.
- ✅ A notable improvement in overall security , creating a more secure environment for staff and customers.
- ✅ Optimisation of prevention processes through the analysis of clear and actionable data from detections.
In short, with tools like Oxania, it's about moving from an often reactive and delayed management of losses to a proactive strategy and intelligent, thereby protecting your margins and contributing to the longevity and success of your business.
