Shrinkage is the gap between what your records say you should have and what's actually on the shelf. Knowing your shrink percentage is step one — knowing which of these four is actually causing it is what lets you fix it. (Need the formula first? See our shrinkage percentage formula page.)
External (shoplifting) or internal (employee). The most talked-about cause, but rarely the only one, and treating every shrink number as a theft problem leads to fixing the wrong thing.
Miscounts, pricing mistakes, and receiving errors that never get corrected in the system. In smaller stores without dedicated inventory staff, this is often the single biggest contributor, not theft.
Product that's unsellable but never formally written off, so it stays on the books as inventory that no longer exists.
Short shipments logged as received in full. Easy to miss without a habit of checking received counts against what was actually ordered.
Two stores can both post 1.2% shrink — one from a single high-theft zone bleeding heavily, the other from small administrative errors spread evenly across the whole floor. Those are completely different problems requiring completely different fixes, and a single store-wide percentage makes them look identical.
Break expected-vs-counted stock down by zone or area instead of just store-wide. A zone that's consistently high relative to the rest of the store points toward theft or a process breakdown specific to that area. Shrink spread evenly everywhere points toward a systemic issue like receiving or counting procedure. The pattern tells you more than the number ever will.
Retail Ops OS rolls up expected vs. counted stock by zone with Hot Zones, so you can see which area is actually driving the number instead of guessing.
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