Shrinkage Explained: A UK Retailer’s Guide to Measuring and Cutting Stock Loss
De Flow AI Team
May 18, 2026•8 min read
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Shrinkage Explained: A UK Retailer’s Guide to Measuring and Cutting Stock Loss
What is shrinkage?
Shrinkage is the gap between recorded stock and actual stock. Its four sources: external theft, internal (employee) theft, supplier/admin error, and process loss. With UK theft at a record £2.2bn (BRC), it’s the metric every UK retailer should track.
How to measure it
Shrink rate = (recorded stock value − physical stock value) ÷ sales, expressed as a %. Benchmark by category and by store, then track the trend — not just the headline number.