Wal-Mart working on reducing 'shrink' as theft hits earnings
In its quarterly report Tuesday, Wal-Mart Stores Inc. emphasized shrink as a significant problem at its stores and said it was taking steps to deal with it.
The retailer cited the problem three times in its press release and another 13 during its conference call with investors, Bloomberg notes.
The issue isn’t due to just one type of theft or loss, but ranges from small-bore shoplifting, major thefts of large items or large amounts of items, employee theft, and poor inventory management, the retailer said.
Bloomberg notes that all this emphasis on shrink and theft is an unusual move for retail companies, even those with major shrink problems. Shrinkage of all types is on average 1.4% of sales, according to a 2014 survey by the National Retail Federation. More than a third is due to old-fashioned shoplifting and almost that much, another third, is thanks to theft by employees. Add to that damaged goods, checkout errors, and other miscellaneous mistakes in inventory.
But for Wal-Mart that adds up to some $7 billion annually, according to Bloomberg’s math.
Technology to fight the problem—more effective store monitoring systems and RFID tags that can follow stuff and let a retailer know where it’s going—has made the job easier. But the best way to combat the problem is well trained and well paid people. Wal-Mart has increased its wage base, and now says it will also be training employees how to better catch and prevent thieves and better manage inventory. The retailer also said in June that it is working on reinstating its door greeters as part of an effort to cut down on theft.
- Bloomberg Wal-Mart Is Getting Hit Hard by Thieves
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