# Shrinkage

> Shrinkage is stock you paid for that is gone without being sold, through theft, damage or errors nobody recorded.

- Source: https://storestandards.com/glossary/shrinkage/
- Also called: Shrink
- Updated: 2026-08-14
- Author: Ruth Alderman, Words, Store Standards

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For a typical small retailer it runs at about one to two percent of stock,
depending on what you sell.

## What actually causes it

Theft is the famous one and rarely the biggest. In most stockrooms the list
runs:

- Damage that went in the bin without an
  [inventory adjustment](https://storestandards.com/glossary/inventory-adjustment/)
- Returns refunded but never put back on the shelf
- Deliveries booked in from the note instead of counted
- Transfers between locations that only got recorded at one end
- Theft, by customers and by staff

The first four are process. Only the last one is a security problem, and it is
the one that gets the budget.

## How to find your real number

You cannot measure shrinkage until the other causes are under control. Fix
receiving, returns and damage first, and count the fast lines with
[cycle counting](https://storestandards.com/glossary/cycle-counting/). Whatever is still missing after
that is the figure worth acting on.

## Where it goes wrong

Shrinkage becomes the answer for every gap. It is comfortable, because it is
nobody's fault and nobody's process.

A store blaming theft for a four percent gap almost always has a receiving
problem instead. The six causes, in the order they usually cost the most, are
in [why Shopify stock counts drift](https://storestandards.com/blog/why-shopify-stock-counts-drift/).

## Related terms

- [Stocktake](https://storestandards.com/glossary/stocktake/): A stocktake is counting every product you hold and correcting the system to match what is really on the shelves.
- [Stock accuracy](https://storestandards.com/glossary/stock-accuracy/): Stock accuracy is how often the number on screen matches the number on the shelf, counted line by line rather than in total.
- [Cycle counting](https://storestandards.com/glossary/cycle-counting/): Cycle counting is counting a few products often, on a rota, instead of counting everything once a year.