Personal Reflection by Violet Nance
As a Dollar General employee during the early KKR years, I was a new Lead Sales Associate, getting my bearings, when we were informed that 70% of inventory shrink came from employee theft. That phrasing hit hard. It felt accusatory, like the company thought we were all dishonest. Years later, with more experience and collaboration with Loss Prevention, I learned that most of that “employee shrink” actually stemmed from human error: miscounts, procedural mistakes, and system flaws. That moment of realization inspired me to look deeper into retail shrink and how messaging can impact team morale. What follows is a researched essay that blends professional insight with real-world experience from my years in the industry.
Retail shrink refers to the loss of inventory that cannot be accounted for through sales, posing a significant challenge for businesses across the industry. While employee theft has often been cited as the predominant cause—with claims frequently hovering around 70%—more recent and detailed data paints a more nuanced picture. According to POS Nation (2024), employee-related shrinkage accounts for approximately 29% of total shrinkage, second only to external theft. This figure encompasses both direct theft and indirect errors, including product breakage and procedural missteps.
A common misconception in retail environments is that most shrink attributed to employees stems from theft. However, as many experienced store leaders can attest, a large portion of this shrink originates from human error. Mis-keyed inventory counts, inaccurate markdowns, and procedural slipups can accumulate over time and be mistakenly interpreted as malicious actions. These errors are seldom intentional but often lack the safeguards or training structures needed to prevent them.
During my time as a store manager, each location had a designated shrink “target” percentage. If that target wasn’t met, the store was subject to audits—an experience I became very familiar with. I spent considerable time working with the Loss Prevention Manager in Hartsville, not just to investigate discrepancies, but to build systems that reduced errors and improved accountability. These audits weren’t just about catching theft; they were about uncovering patterns, retraining staff, and refining inventory practices.
Organized Retail Crime (ORC) presented its own challenges. In Westmoreland, I encountered repeat offenders who would steal merchandise, return it for store credit, and then use that credit to purchase prepaid cards, such as Vanilla Visa or gas cards—items that could be spent anywhere. Although the POS system allowed it, I implemented a store-level policy to block those transactions. A corporate contact later confirmed that such purchases should never have been permitted, as Dollar General gift cards were issued from non-receipted returns.
In Hartsville, a more costly incident occurred when a customer convinced a new cashier to cash out a transaction after merely swiping a card without completing the sale. That transaction included a prepaid card worth several hundred dollars. By the time I learned of it at closing, the card had already been emptied, and the transaction couldn’t be voided. I had no choice but to terminate the cashier, a decision that weighed heavily but was necessary to protect store integrity.
These experiences reflect the broader confusion and inconsistency surrounding ORC. According to Retail Dive, the term “organized retail crime” is often used interchangeably with general theft, despite being a subset of shrink. The National Retail Federation (NRF) estimates that external theft—including ORC, shoplifting, and fraud—accounts for 36% of shrink, while employee theft accounts for 29%. However, definitions vary widely, and some analysts believe retailers may be overstating the impact of ORC to mask other operational issues (Kalvaria, 2023).
The lack of clarity around ORC makes it difficult for store managers and law enforcement to respond effectively. As I saw firsthand, even when patterns are obvious, the tools and policies don’t always align. That’s why localized strategies, clear definitions, and empowered store leadership are essential to tackling shrink in all its forms.
Effective shrink reduction demands an integrated strategy. Training must go beyond theft deterrence to include systems education, procedural literacy, and trust-building among staff. Technology upgrades, such as POS improvements and inventory management software, help reduce manual errors. Crucially, store managers and loss prevention teams must foster a culture where mistakes are addressed transparently rather than punished indiscriminately.
Retail shrink is a multifaceted challenge that can be best addressed through clarity, compassion, and collaboration. By recognizing that employee-driven shrink is often error-based rather than malicious, retailers can build smarter policies and stronger teams. Leaders who have walked the floors—as I have—know that the solutions aren’t found in suspicion but in systems, accountability, and shared success.