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Inventory Shrinkage

Shrinkage is the difference between book inventory and physical counts from theft, damage, or errors.

Reading time
4 min read
Difficulty
Beginner
Last updated
Last updated:

Control

Regular cycle counts on A items reduce shrinkage surprises.

Investigate shrinkage above industry benchmarks.

Key takeaways

  • Shrinkage % = (recorded − physical) ÷ recorded
  • Root-cause analysis prevents recurrence

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FAQ

What is typical retail shrink?
Industry reports often cite 1–2% of sales — varies widely by category and controls.