People working in the retail world would tell you that factors like theft, shoplifting, administrative error and fraud constantly threaten the industry.  That it has primarily a direct influence on the profit of a business and secondarily on the physical and emotional wellbeing of all concerned.  Other factors which contribute to shrinkage are wastage, damages and armed robberies.

Retailers have to identify their customers and effectively target a specific market segment and audience by understanding the demographic characteristics, lifestyle behaviours and purchase preferences that influence their buying decisions.  If there is stock on the shelves that doesn’t ‘move’ because it doesn’t appeal to the customers in the specific area where the store is located, the stock will expire and this will lead to loss.

Consumer patterns establish the stock on the shelves for every day of the week.  Stock control gives an indication of how many items are sold on average per item during a specific week.  This is indicated on the P.I. (Price Information) Label.  This helps management to decide how to order stock.  Establishing on which days more customers are expected, helps to decide on the number of cashiers and packers needed on certain days. 

To prevent loss control, certain business systems need to be in place to make sure that all departments are working properly.  Every part of the wholesale or the retail outlet is part of this system.  Certain steps and procedures must be followed to ensure that the operation of, for instance, receiving or cashing up is run smoothly to prevent losses through theft and errors.