What is responsible for the highest percentage of inventory shrinkage?

Employee theft is recognized as a significant contributor to inventory shrinkage, often surpassing the impact of other factors such as shoplifting or damage. This type of loss occurs when employees engage in dishonest behavior, such as stealing merchandise or manipulating the inventory system to conceal theft.

Retailers face challenges not only from outside theft but also from their own workforce, which can result in a substantial financial drain. Studies indicate that employee theft frequently constitutes a larger percentage of inventory loss because it is often systematic, sometimes involving collusion among staff, and can be more difficult to detect compared to shoplifting.

The circumstances surrounding employee theft can stem from a variety of motivations, including dissatisfaction with pay, work environment, or personal financial distress. Consequently, retailers must establish robust internal controls and foster a positive workplace culture in order to mitigate this risk.

Other factors, while contributing to inventory shrinkage, do not have the same level of impact as employee theft in many retail settings. Shoplifting often garners significant attention, but statistics consistently show that employee theft leads to greater losses overall.