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Shrinkage Explained: A UK Retailer’s Guide to Measuring and Cutting Stock Loss
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Shrinkage Explained: A UK Retailer’s Guide to Measuring and Cutting Stock Loss

De Flow AI Team

De Flow AI Team

May 18, 20268 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.

The cut-shrink playbook

  1. Instrument tills and exits with HD cameras.
  2. Add vision-AI to match items to transactions.
  3. Route exceptions to staff via real-time alerts.
  4. Review analytics weekly; act on the worst hours/lines.
  5. Tighten inventory processes to remove admin error.

Cut Shrink in Your UK Stores

See how De Flow AI's computer-vision loss prevention spots theft, fraud and risky behaviour in real time — and pays for itself within months.

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