Due to online competition, retail store margins are already severely strained. Additionally, shrink, or a shortage of inventory relative to the records that are currently available in the system, could negatively impact a retailer's bottom line. Shrinkage is the loss of inventory due to factors including employee theft, shoplifting and other issues. It can happen on the sales floor, at check-out, or even at the store exit.
Since more shrinkage results in lower profitability, shrinkage numbers put merchants at risk. Shrinkage reached an all-time high in 2021, according to the National Retail Security Survey 2021, and it cost retailers 1.6% of their revenue.