There are two types of shrinkage, relaxation shrinkage and felting shrinkage. The first is not unique to wool and is the result of tension on the fibres from various industrial processes causing the fibres to stretch. Naturally, they will tend to return to their original state. The second, felting shrinkage is a well-known characteristic of wool which is usually seen as a result of washing woollen garments.
Igor's grandmother once told him, "if you wash woollens carefully by hand, they'll never shrink!" She said, "people are in too much of a hurry these days to take care of their clothing."
"Why does wool shrink?" he asked one of the people at the wool factory. This was the response...
If you look at a wool fibre through a microscope, you'll see that its surface is covered in what looks like scales. That's the way sheep's hair grows. When wool is spun into yarn, each fibre is pressed against others. Two fibres can be placed together either as you see in picture A, with the scales in the same direction, or as in picture B, with the scales pointing in opposite directions. The yarn is knitted into a garment and the buyer of the garment will want to wash it sooner or later. Now the water will cause the fibres to swell, making the scales stick out further and they will stop movement in one direction, for the scales of one fibre will lock in the scales of another, as the fibres in picture A will. This causes wool to lose its natural stretch and it can't compensate for the progressive movement of wool fibres into closer interlocking, so the garment shrinks.
Scientists have invented a treatment which coats wool fibres with a resin and this has the effect of covering the wool fibre's scaly external surface, reducing or even preventing its tendency to lock with other fibres.