Top Sources of Shrinkage for Hardware Stores

Shrinkage is a familiar term for retailers as it is a constant metric that they are looking to control and reduce. Shrinkage can mean a loss of inventory due to shoplifting, employee theft, or errors with filing or receiving products. When shrinkage is not addressed, it is costly for the retailer and has a rippling effect throughout the business. To address this costly problem, the top sources of shrinkage for hardware stores should be reviewed regularly as part of your loss prevention strategy.


For many hardware stores, shoplifting is the number one source of shrinkage. Previously, it was employee theft but an increase in organized crime has pushed shoplifting to the top. Shoplifters may also try to return products that have been stolen to receive payment. Shoplifting continues to challenge hardware retailers, as items are widely sought-after and easily sold on the resale market.

Employee Theft

Employee theft is still considered a large contributor to a hardware store’s overall shrinkage. Besides stealing inventory, employee theft is also associated with misappropriating funds. Limiting access to security devices and cash registers to selected individuals can minimize opportunities for theft. It can be difficult to establish strategies to reduce employee theft without impacting morale. Hardware retailers should be cautious when introducing new policies.

Administrative Error

Human error is also one of the leading causes of shrinkage for hardware stores. When administrative errors are made, they can deeply impact the business’ bottom line. A simple pricing mistake such an incorrect markdown can be costly. Research shows that administrative errors make up approximately 16% of shrinkage for retailers. Having strong protections and practices for your accounting system and inventory management are crucial for reducing this top source of shrinkage.

How Hardware Retailers Can Reduce Shrinkage

Hardware retailers can implement these strategies to reduce shrinkage and its impact on gross profit.

  • Thwart shoplifting with customer service that is attentive and available for customers.
  • Have proper floor coverage to ensure an employee is always nearby to offer customer service and monitor for theft.
  • Create strong cash and product handling policies to help reduce employee theft.
  • Properly train employees to use inventory software to reduce administrative errors.
  • Secure valuable merchandise and limit access to the keys to selected employees.

Implementing an effective security strategy to safeguard inventory is crucial to stopping customer and employee theft. When products are safely secured to their displays, customers and employees are not able to easily steal them. At RTF Global, we offer a complete security solutions for hardware retailers that use aircraft cable recoilers and cable locks to secure products. We manufacture a variety of wall adapters that can easily integrate into many current retail displays used for items like saws, drills, or lawn and garden equipment. They are easy to use, tough to remove, and customizable to your specific needs.

RTF Global’s Products Can Help Reduce Shrinkage for Hardware Stores

Trust our team of experts when you are looking to reduce the top sources of shrinkage for your hardware store. We have decades of experience helping retailers protect their valuable inventory. Let us create a customized solution for your business. Contact us today to get started.


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