The Impact of Packaging Design on Retail Shrinkage

retail merchandising electronic shelf labelling

Most people when they think of retail shrinkage automatically think of theft. There are a number of reasons for shrinkage and the way a product is packaged can have a direct impact on shrinkage numbers.

Packaging has a number of purposes that need to be fulfilled which is why it is sometimes difficult for manufacturers to tick every box and reduce retail shrinkage. Listed below are the main functions of packaging.

Causes of shrinkage can be pooled into 2 main groups of malicious and non-malicious shrinkage.

Packaging design can fall into both of these categories


  • External/internal theft due to poor security on packaging
  • Very little packaging to make the item easier to steal
  • Security tags obscuring product information on the packaging

Non Malicious

  • Products broken in supply chain from manufacturer to shelf due to inadequate packaging
  • Barcoding not clear on packaging so not scanned or misidentified
  • Products exposed to the elements and spoiled due to inefficient packaging
  • Packaging damaged in transit which makes the product too unsightly to sell
  • Decreased shelf life due to sell by dates not being clear enough

When a retailer has identified through investigations and analysis whether packaging related shrinkage issues are malicious or non-malicious then steps can be taken to reduce these instances.

  1. Documenting products through the supply chain to identify where within the supply chain items are being damaged.
  2. Improving placement of security tags (hard and soft) so information on product isn’t obscured but is a clear deterrent to thieves (internal and external).
  3. Making sure barcodes on pallets are not concealed or obscured.
  4. Date codes need to be clear to ensure correct stock rotation is in place.
  5. Customers may be tempted to open and try/look at a product before buying – this can damage the packaging but rigid plastic shrink wrap and blister packs can prevent this.
  6. Security tags need to be attached securely but not obscuring the barcode or important information on the packaging.
  7. Barcodes on packaging need to be easily accessible to scan otherwise a self-scanner may not bother scanning and a till operator may use a dump code at a reduced cost.

Following the above points could help to reduce packaging related shrinkage and improve retail profitability and even customer satisfaction.