🧵 Understand and Act: What is Shrinkage and Why Does it Impact Your Business?
Shrinkage , that discrepancy between your theoretical stock (what your records show) and the actual stock observed during physical inventory, represents much more than a simple accounting difference. It's a net loss that directly erodes your profits. For retail businesses such as grocery stores, pharmacies, or even DIY stores, it results in a significant reduction in the 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 which is sometimes difficult to detect, or product damage that has not been properly recorded also need to be considered. Precisely identifying these multiple origins is the crucial first step to implementing truly effective corrective actions and sustainably protecting your assets.
📈 Traditional Shrinkage Calculation: A Necessity and Its Limitations
The most classic method for quantifying shrinkage is based on a simple and well-established formula : ( Initial Stock + Purchases during the period) – ( Ending Stock from physical inventory + Sales recorded) = Shrinkage . This calculation, while absolutely essential for rigorous accounting and sound inventory management, provides a valuable indicator but is, by nature, fundamentally
retrospective . It allows for the observation of a loss once it has already occurred, often long after the events that caused it have taken place. Furthermore, without the support of more sophisticated analytical tools, it remains particularly complex to attribute with certainty the exact proportion of each cause (external theft, internal theft, administrative error, damage) to the total amount of shrinkage. This approach, while indispensable, does not always allow for the proactive identification of truly at-risk areas or specific
suspicious behaviors
to effectively prevent future losses. 📷 Optimizing the Fight: The Valuable Contribution of Smart Cameras in Stores Given the inherent limitations of traditional calculation, " smart camera systems in stores " bring a true revolution in 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 behaviors , which are often the precursors to an act of theft or a potential loss. They not only allow for more reactive action in the moment but also enable a much deeper understanding of the dynamics of shrinkage within your establishment. This technology specifically helps highlight " hot spots " – those specific areas of your business that prove to be the most vulnerable – as well as the products most frequently targeted . Thus, instead of simply observing losses after the fact, you benefit from a considerable
- preventive action capability : ➡️ Receive discreet alerts for
- rapid and targeted intervention by staff. ➡️ Deter attempts through a visible and modern
- technological presence
- .
➡️ Collect information and evidence to better understand recurring theft patterns.
➡️ Optimize aisle layout and product presentation to minimize opportunities for shrinkage. ✨ Oxania: Your Technological Ally to Reduce Your Shrinkage In this quest for optimization and protection of your margins, innovative solutions are emerging to transform shrinkage management. An advanced suspicious gesture detection system, based on the power of Artificial Intelligence , can become a leading technological ally . It is specifically designed to integrate into daily store operations, providing a detailed understanding of losses and, most importantly, the
concrete means to effectively address them. The main objective is to provide
- measurable benefits , going well beyond simple passive surveillance. ✅ A
- measurable decrease in the shrinkage rate. ✅ A notable improvement in
- overall security , creating a more serene environment for staff and customers. ✅ Optimization of prevention processes through the analysis of
clear and actionable data from detections. In short, with tools like Oxania, it's about moving from often reactive and late loss management to a
