Shrinkage (accounting)

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Food spoilage, shoplifting, spills and damage to items can cause shrinkage.

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In accounting, shrinkage or shrink occurs when a retailer has fewer items in stock than were expected by the inventory list. This can be caused by clerical error, or from goods being damaged, lost, or stolen between the point of manufacture (or purchase from a supplier) and the point of sale.^[1] High shrinkage can adversely affect a retailer's profit.^[2]

In 2008, the retail industry in the United States experienced shrinkage rates of around 1.52% of sales.^[3] During the same year, retailers in Europe and Asia Pacific reported average shrinkage of about 1.27% and 1.20% of sales, respectively.^[4]