Shrinkage is a change in dimensions across the length and width of the fabric after washing, usage, and when exposed to the relaxing of fabrics. Mainly shrinkage is of two types. One is minus shrinkage and the other is plus shrinkage. Skew (twisting of the vertical grains) is also observed along with shrinkage. Abnormal twisting is also considered as a non-conformity.  

Heat and water cause wrinkles. Heat breaks the bonds holding polymers in place within the fibers of a fabric. When the bonds are broken, the fibers are less rigid with respect to each other, so they can shift into new positions. As the fabric cools, locking the fibers into a new shape. This is both how ironing gets wrinkles out of your clothes and why letting clothes cool in a heap fresh from the dryer will instill wrinkles.