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Putting a Value on Loss

Putting a Value on Loss

This research explored how retailers value shrink, the extent to which different methods are used across the retail community, and why this is the case.

The research considers the cases for using Cost and Retail methods and how retailers vary their use depending on the audience for the data. As a rule, the Retail valuation method is preferred when the intention is to draw attention to the importance of shrinkage - in effect it makes the number as large as possible. However, for CFOs and others in accounting, their sole interest is understanding the actual 'value' of shrinkage in accounting terms and so often they prefer using a Cost valuation.