What is shrinkage?

Shrinkage is the gap between recorded stock and actual stock. Its four sources: external theft, internal (employee) theft, supplier/admin error, and process loss. With UK theft at a record £2.2bn (BRC), it’s the metric every UK retailer should track.

How to measure it

Shrink rate = (recorded stock value − physical stock value) ÷ sales, expressed as a %. Benchmark by category and by store, then track the trend — not just the headline number.

The cut-shrink playbook

1. Instrument tills and exits with HD cameras.
2. Add vision-AI to match items to transactions.
3. Route exceptions to staff via real-time alerts.
4. Review analytics weekly; act on the worst hours/lines.
5. Tighten inventory processes to remove admin error.