Encyclopedia > Shrinkage

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In sales, shrinkage is the loss rate of products between point of manufacture and point of sale. Sometimes shrinkage may be as high as 15% to 20% of total volume, having a major negative impact on profits. Shrinkage is often considered a cost of doing business in retail.

Shrinkage is for a large part due to theft or some other crime, and the prevention of this type of shrinkage is one reason for security guards. Also some shrinkage is due to damage in transit, shipping errors or misplaced goods.

See also: economics, marketing, product management, retail

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