ABSTRACT
When I was a loss prevention manager trainee at a regional mass merchandise discounter named Hills Department Stores, training on the causes of operational inefciencies was an important part of understanding shrinkage reduction. As a review of what constitutes shrinkage in a retail store environment, we must rst look at how to determine a shrinkage gure. Shrinkage is dened as the difference between the physical inventory of the store and what is on the books at the time that inventory is taken. If there is less merchandise on the physical inventory than the book accounting of the store, then it is indeed shrinkage. However, if there is more merchandise than the book accounts for, then an overage has occurred. Most companies set goals at having zero shrinkage and zero overage.
