How to Deal with Shrinkage at Walmart

Running Head: HOW TO DEAL WITH SHRINKAGE AT WALMART
How to deal with the issue of shrinkage by providing proper training to employees
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HOW TO DEAL WITH SHRINKAGE AT WALMART
Introduction
Technology has changed the way business is conducted. Retail shrinkage problem is one
of the serious issues affecting modern businesses. According to (Beck, 2017), retail shrinkage
accounts for approximately $38 billion in losses every year. Retail shrinkage, in this case,
implies the difference between the recorded inventories at the end of the year as compared to
what had been recorded at the beginning of the year. Such losses are often attributed to factors
such as theft, shoplifting, auditing issues, vendor fraud, as well as administrative errors. As
expected, there is a high correlation between the complexity of the stores or business entity with
retail shrinkage. It is worth noting that retail shrinkage poses a serious profit threat to businesses
that have low-profit margins such as grocery stores. Whereas internal theft accounts for the
highest amount of retail shrinkage, external theft such as robbery also accounts for appreciable
retail shrinkage (Shukur, Månsson, & Sjölander, 2014).
Thesis – This paper explains how to deal with the issue of shrinkage by providing proper training
to employees at Walmart.
Many businesses have adopted a combination of various measures in their efforts to
reduce retail shrinkage. (Wang, Huang, & Tung, 2016), highlights crime prevention through
environmental design (CPTED), loss prevention technologies, audits, benefit denial systems,
among others as some of the most viable measures. For instance, most retail stores, warehouses,
and workshops have an architectural layout purposely designed to make it possible to control
retail shrinkage. Also, the invention of auditing technologies has made it possible for businesses
to carry out audits in real time using auditing software (Bensoussan, Çakanyıldırım, Li & Sethi,
2013). This way, it is possible to tell when retail shrinkage is happening and therefore be in a

HOW TO DEAL WITH SHRINKAGE AT WALMART
position to employ necessary measures in time. The use of video technology including 24-hour
CCTV surveillance systems has come in handy in addressing the problem at hand.
With the overwhelming improvement in technology, more businesses are using
computerized processing systems as a replacement for human labour. In conjunction with the
computerized systems are various control subsystems such as electronic article surveillance,
radio frequency identification devices (Fan et al., 2014). The use of such systems has enabled
control of stock movement thereby reducing retail shrinkage significantly. However, use of such
systems has lately been augmented with the use of human resource. For instance, many
businesses have employed loss prevention specialists, loss prevention specialists’ agents and
store detectives, internal and external auditors. More importantly, there has been a significant
investment in software and network security personnel to protect the business from internal or
external hacking or any form of system compromise. The bottom line is that synergistic use of
these methods can go a long way in reducing retail shrinkage significantly (Sheng, Tijun &
Weili, 2010).
Walmart being a mega retail store also faces the problem of retail shrinkage. Despite
having automated many of its processes, the company has to use human resource in most of its
operation. It is therefore essential that when dealing with a problem like a shrinkage that the
company educated its employees on its advantages and its disadvantages. Some factors leading
to retail shrinkage including:
Shoplifting -Shoplifting is a prevalent method of theft, and the products that are stolen
vary widely in value and size. Some shoplifters steal a few small items while others take greater
risks, aiming for bigger, more accessible products. Companies introduce some methods to reduce
shoplifting such as the introduction of electronic tags to expensive products and clothing which