what is the impact of shrinkage 
the largest impact of shrinkage is a loss of profits this is especially negative in retail environments where businesses operate on low margins and high volumes meaning that retailers have to sell a large amount of product to make a profit if a retailer loses inventory through shrinkage it cannot recoup the cost of the inventory itself as there is no inventory to sell or inventory to return which trickles down to decrease the bottom line shrinkage is a part of every retail company s reality and some businesses try to cover the potential decrease in profits by increasing the price of available products to account for the losses in inventory these increased prices are passed on to the consumer who is required to bear the burden for theft and inefficiencies that might cause a loss of product if a consumer is price sensitive then shrinkage decreases a company s consumer base causing them to look elsewhere for similar goods in addition shrinkage can increase a company s costs in other areas for example retailers would have to invest heavily in additional security whether that investment is in security guards technology or other essentials to prevent shrinkage that was caused by theft these costs work to further reduce profits or to increase prices if the expenses are passed on to the customer 