As retailers, in the coming weeks, report on the busy holiday shopping season, investors and analysts will be trying to get more understanding into shrinkage and theft, the Wall Street Journal reported. Finance executives say that they are fighting a growing wave of theft, cutting into profits that were already under pressure. But theft is just one contributor to shrink, the industry term for the difference between inventory on the books and what’s physically on hand. Lost or damaged goods and inaccurate records also play a part. The picture of retail shrink, which retailers say has been accelerating, may also have been distorted by effects of the pandemic and inflation, some analysts say. Shrink is now one of the most frequently discussed topics among management at Home Depot, said Chief Financial Officer Richard McPhail. Shrink moved onto McPhail’s list of top priorities roughly two years ago. That focus hasn’t changed even though some mitigation efforts, such as locking up certain items and using live-view parking lot cameras, are bending the curve, McPhail said. Some analysts say the higher shrink may partly reflect a return to prepandemic norms rather than entirely new trends in theft. Reduced visits to physical stores starting in 2020 simultaneously decreased the opportunities for theft, they say, an effect that dissipated as shoppers stepped out of their houses again.
