Shrinkage

Stock that disappears. Theft, damage, error and fraud, in that order of frequency.

What it means

Shrinkage is the difference between recorded stock and actual stock, expressed as a percentage of sales.

Why it matters

It comes straight off the bottom line, and at typical retail margins a 1% shrinkage rate can be a tenth of the profit.

What it looks like in practice

Sources are external theft, internal theft, administrative error and supplier fraud. Counting properly is the only way to know which — most retailers assume shoplifting and find paperwork.

What to watch out for

Blaming theft without measuring. Cycle counting high-value lines monthly tells you where the loss actually is.

Where to get proper advice

Your own stock counts. The British Retail Consortium publishes sector benchmarks.