Shrink: Why relying on POS data isn’t enough for retailers

Retail shrink has been a thorn in the side of retailers for years—and it’s not just about theft. Operational inefficiencies, inventory errors, breakage, and supply chain hiccups are all contributing factors. Yet, many retailers still lean heavily on point-of-sale (POS) data, hoping it will illuminate the full picture.

Spoiler alert: It doesn’t. While POS data is great for tracking sales, it misses critical moments that lead to shrink, leaving teams grappling with costly blind spots. So, how can retailers close the gap? By pairing POS data with near real-time inventory insights that shine a light on the shelf-level activity causing shrink. Here’s a closer look.

1. POS data doesn’t tell the whole story

POS systems are fantastic for showing what’s sold, when, and for how much. But shrink happens across the entire supply chain—long before (and even after) an item hits the checkout counter. For example, the cost of goods sold (COGS) can be impacted by excess inventory left unsold or misplaced during handling.

Take this real-world scenario: A retailer noticed that high-margin seasonal items were consistently missing from their shelves during audits. Was it theft? Damaged goods? Stock misplacement? POS data couldn’t provide the answers because the problem originated in the stockroom during unpacking.

With the help of an inventory scanning robot powered by BrainOS®, the retailer discovered the issue wasn’t theft or damage—it was mislabeled stock in the backroom. Once they fixed the labeling process, those high-margin seasonal items made it to the shelves on time, boosting sales and keeping customers happy.

Without visibility into that part of the process, many retailers can be left guessing. Similarly, consider products that expire or get damaged before they even make it to the sales floor. They’re logged as inventory but never see the light of day—or a paying customer.

The takeaway: POS systems only capture sales data, leaving massive blind spots in the areas where shrink often originates.

2. The reactive nature of POS vs. the power of real-time visibility

POS data provides a historical snapshot—helpful, but inherently reactive. By the time you’ve identified a problem, it’s already impacted your bottom line. Imagine a scenario where misplaced inventory items go unnoticed for weeks, leading to out-of-stocks on the sales floor. One retailer we worked with used manual inventory checks to solve this but found they were too slow and resource-intensive to keep up.

That’s where near real-time visibility, powered by inventory-scanning autonomous mobile robots (AMRs), comes in. AMRs with BrainOS® provide up-to-the-minute data on stock levels, misplaced items, and discrepancies. One retailer shared how these robots helped them spot a pallet of items mistakenly stored in the wrong aisle—a costly oversight that manual checks missed.

3. Amplifying, not replacing, human efforts

Retail teams are juggling hundreds of daily tasks, from stocking shelves to managing customer service interactions. Shrink often sneaks in where humans are stretched thin, like during manual inventory audits or when misplaced stock goes unnoticed. Here’s an anecdote: A store manager described how their team would spend hours manually counting inventory after closing, only to discover discrepancies they couldn’t trace.

With the introduction of inventory-scanning AMRs, those same team members now focus on store presentation and customer engagement while robots handle the heavy lifting. Rather than replacing employees, these systems extend their capabilities—allowing teams to work smarter, not harder. Think of it as giving your team “superpowers” to manage inventory control and shrink more efficiently.

4. Connecting the dots: POS and beyond

Shrink isn’t an isolated problem. It impacts everything from profitability to customer satisfaction. Comparing POS data with insights from AMRs unlocks a fuller picture, helping teams address shrink holistically. Robots can scan shelves in real-time to identify misplaced items or out-of-stocks before customers notice.

Teams can act proactively, using insights to reduce the risk of overordering and improve inventory accuracy. Retailers who combine POS data with AMR-powered insights report fewer stockouts, better inventory turnover, and more efficient business operations.

A smarter approach to shrink

A 2021 study published in the International Journal of Business and Social Science looked into how mistakes in manual inventory tracking can hit businesses financially. It found that errors like misplaced items, waste, and even fraud are common with manual systems, leading to big losses. 

The researchers recommended switching to automated inventory management systems to cut down on mistakes and keep inventory records more accurate.

In 2023, inventory distortion caused a staggering $1.77 TRILLION in losses according to IHL Group. Let that sink in for a moment—that’s not just millions or billions, but trillions of dollars lost due to stockouts, overstock, and misplaced inventory.

It’s true, retailers don’t just need data—they need actionable insights that empower their teams to do more with less. BrainOS®-powered AMRs provide exactly that. By taking on time-consuming tasks like inventory scanning, they free up employees to focus on what matters most: creating a seamless shopping experience and driving operational excellence.

Ready to transform how you tackle shrink? Let BrainOS®-powered AMRs help you unlock a new level of efficiency and accuracy.

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