Guide
Track inventory shrinkage and loss
Find out where stock is actually disappearing to, theft, damage, or paperwork errors.
Calculate your shrinkage rate after every full count
Shrinkage rate = (expected stock minus actual stock) divided by expected stock. Track this number over time, a rising trend is worth investigating even if the absolute number seems small.
Separate the three main causes
Theft (external or internal), damage (breakage, spoilage, returns that can't be resold), and administrative error (miscounts, unlogged transfers). Each needs a different fix, so don't lump them together.
Tighten receiving and returns logging first
Administrative error is usually the biggest and easiest-to-fix cause. Make sure every incoming shipment and every return gets logged the same day it happens, not 'whenever there's time'.
Watch for patterns by location, shift, or employee
If shrinkage is consistently worse at one location, during one shift, or in one category, that's a specific lead worth following, rather than a general 'shrinkage is a problem' conclusion.
Set a shrinkage benchmark and revisit it quarterly
Retail industry average shrinkage is roughly 1.5-2% of sales. If you're well above that, it's worth real investigation. If you're well below it, you probably don't need to overhaul anything.
That’s the whole thing.
Keep going
What to read next
- 01
Inventory & Stock
Set up a simple reorder point system
Know exactly when to reorder before you run out, without staring at spreadsheets daily.
- 02
Inventory & Stock
Do a physical inventory count without shutting down
Get an accurate count of what you actually have, not just what your system says you have.
- 03
Inventory & Stock
Avoid stockouts during your busiest season
Plan ahead so your best sales period isn't ruined by an empty shelf or sold-out listing.