Shrinkage
Shrinkage is the rate of loss of products (e.g., through shoplifting) from retailers' stocks as a percentage of profit or sales; the value of products lost between supply and sale as a percentage of the total cost of goods sold. The main causes of shrinkage are shoplifting, employee theft, administrative errors and fraud.
The British Retail Consortium estimates the total loses due to shrinkage of £1.96bn in 2003. £1.00bn was due to losses from crime while the remainder was a result of prevention costs.41% of shrinkage was caused by shoplifting, 28% by staff and the remaining 11% by burglary, fraud, damage and other losses.
The effect of shrinkage on profits can be very significant, especially for retailers with small margins.