What is shrinkage?

At the end of the quarter, a shop's records say it holds $5,000 of stock at cost. A stocktake finds $4,850. The difference is $150, so the rate is 150 / 5,000 = 3%.

The number alone does not say why. The useful step is splitting that $150 into causes. If $60 is known breakage, $40 is a miscounted delivery and $50 is unexplained, then only the last part might be theft. Without that split, owners tend to blame theft for what are really recording errors.

• Customer theft. Small, easy-to-pocket items go first.
• Staff theft. Often small and repeated, and hard to see without records.
• Damage and spoilage. Dropped bottles, leaking packs and expired goods.
• Supplier errors. The delivery had fewer items than the invoice.
• Process errors. Sales rung up on the wrong product, or a return not put back.

Recording damage and expiry when they happen, instead of leaving them as unexplained gaps, keeps the rate honest. The guide on reducing stock loss covers prevention step by step.

Shopkeepa keeps stock as a ledger of movements, including damaged, expired, theft or loss, and correction. A rapid stock count then compares what you counted with what the system expected. Cashiers cannot see cost or profit, which also limits what can be misused.