The evening after a stocktake always looks the same. There is the number that doesn't add up, and next to it nothing. You can't tell when it arose, on which products, and above all not why. That is when people start to suspect — and it is exactly the worst starting point, because most of the shrinkage usually isn't theft.
Shrinkage isn't one thing. It is the outcome of four entirely separate processes that happen to meet in the same figure. While you look at them together there is nothing to be done; the moment you separate them, each one has a concrete next step.
The four components of shrinkage
| What is it? | How does it arise? | What to do about it |
|---|---|---|
| Staff consumption | The team drinks, eats or takes something home | Record it, by name — don't ban it |
| Waste | It expires, breaks, spoils, becomes unsellable | Change the order quantity |
| Administrative error | Wrong price rung, a delivery not booked in, a botched return | Fix the process |
| Actual theft | A customer or an employee takes something | Investigate, tighten the process |
The ranking surprises most shops: the biggest item isn't the fourth row, it is the third. Administrative error is quiet, unintentional, and nobody feels it is theirs — which is why nobody talks about it, while it keeps producing shrinkage month after month.
Why the percentage tells you nothing
The first question is usually what counts as normal. There is a rough figure, but it is worth less than you'd think: shrinkage in shops tends to run around one to two percent of turnover, higher where fresh goods make up a large share, lower for packaged products.
The trouble is that the same percentage means something completely different if half of it is waste and if half of it is unexplained. In the first case you look at ordering, in the second at the process. So the percentage on its own is not a basis for action — its BREAKDOWN is.
Measuring: two weeks, three lists
Separating the causes needs neither an inventory system nor extra software. It needs two weeks in which the shop actually records what happens. That is when it becomes clear which row your shrinkage comes from.
- 11. Staff consumption — by nameEvery coffee, sandwich and loaf taken home goes in, under the name of whoever took it. Not as punishment: this is what makes it accounted for, and keeps it out of the unexplained column.
- 22. Waste — with a reasonFor anything thrown away, note what it was and why. Expiry points at ordering, breakage at storage, a chiller fault at the equipment.
- 33. What ran out too earlyOne tick every time someone has to say it's sold out. That list will be worth its weight later, when you look at ordering.
- 44. Sit down with it after two weeksAdd the three lists up in money and compare them with the shrinkage. What remains is the unexplained part — and that is the only part worth worrying about.
Administrative error: the most common, and the cheapest to fix
This is the category we talk about least, even though in most shops it produces the larger half of the shrinkage. Not malice, not negligence — simply the small slips of daily operation, adding up.
- The wrong price rung up: one of two similar items, because only the name was there to choose by.
- A delivery not booked in: the goods arrived but never entered the system — on paper stock is lower.
- Weighed goods: they leave at a different weight than they arrived at, and the difference accumulates over weeks.
- Returns and exchanges: the customer brought it back, nothing happened in the system.
- A discount given by hand: the price came down, but stock was deducted at the full price.
- A promotional price that only existed on the shelf: the old price ran at the till and was corrected afterwards.
When it really is theft
If an unexplained part remains after the three lists are added up, then it is worth looking into — but only then, and only at that part. The signs typically differ depending on whether it comes from outside or inside.
| What to watch for | What it points to |
|---|---|
| The same small, expensive product group vanishes without trace | Shop theft — typically a customer |
| The shrinkage always arises in the same shift | Internal — but it can also be a process fault |
| Till differences are round numbers and repeat | Not chance; look at the process |
| Many manual discounts and voids from one person | Worth checking, not necessarily bad intent |
| The shrinkage is scattered, small and spread across everything | Administration rather than theft |
The shift close that prevents shrinkage
Part of the shrinkage never arises on the shelf at all, but at the till. If the till is reconciled only once a day, after closing, then a difference can no longer be traced to an hour or a shift — and everyone ends up implicated, when in all likelihood only one person is involved.
If instead every shift starts with its own opening float and ends with its own close, the difference belongs to the few hours in which it arose — and to the person who still remembers that day. That is what makes the conversation matter-of-fact rather than suspicious.
What not to do
- Don't make employees pay for the shrinkage. The number goes to zero, the problem stays, and you will never find it again.
- Don't introduce collective punishment. The blameless are hurt most, while the cause remains untouched.
- Don't start with cameras. A camera proves but does not explain — and the team reads it as a lack of trust.
- Don't ban staff consumption. It doesn't stop, it just becomes invisible — and it is your measurement you have ruined.
- Don't wait for the annual stocktake. What you see twelve months later can no longer be fixed.
Twenty minutes a month is enough
- 1Add up the month's waste and staff consumption in money. Those two numbers are the explained part of your shrinkage.
- 2Look at which products show waste regularly — for those the question is ordering, not shrinkage.
- 3Run through the till differences by shift. If a pattern repeats, look at the process, not the person.
- 4Once a month count the twenty most expensive products. A narrow stocktake takes ten minutes and warns you in time.
- 5Write down what changed. Next month that will be your basis for comparison.
In summary
Shrinkage hurts because it arrives as a single number with no explanation. Once you split it into its four causes — staff consumption, waste, administrative error, theft — each one has a concrete, doable step, and it turns out most of it isn't a question of trust at all.
Measuring takes two weeks, not a year. Staff consumption by name, waste with a reason, till differences by shift — with those three in place, what remains is what genuinely needs attention. And it is usually far smaller than you feared.
Frequently asked questions
How much shrinkage counts as normal in a shop?
In many places it runs around one to two percent of turnover, typically more with fresh goods and less with packaged products. The figure alone says little: what matters is the breakdown — how much of it is waste, staff consumption and unexplained.
How do I tell theft from administrative error?
From the pattern. Scattered, small shrinkage spread across everything is more likely administration; repeated shrinkage on one narrow product group or one shift is suspicious. Always look at the process first.
Should staff consumption be banned?
No, quite the opposite. A ban doesn't stop it, it only makes it invisible — and from then on it shows up as shrinkage. Recorded, it becomes accounted for, and the remaining shrinkage finally means something.
Is stocktaking once a year enough?
A full stocktake once or twice a year is justified, but it isn't good for fixing anything. A narrow monthly count of twenty products takes ten minutes and warns you while there is still time to act.
Should I put cameras in the shop?
You can, but don't start there. A camera can prove, not explain — and the team reads it as distrust. Measure first: in most cases even after the camera it turns out not to be theft.
What if the shrinkage always arises in the same shift?
Talk about it, but with an open mind. Repetition can point to inexperience, a rushed handover or a bad process just as easily. Start with a question, not an accusation — and look at how the handover works for them.
Does shrinkage affect profit?
Yes, directly. The cost price of the lost goods has already been paid and no revenue came in against it. That is why it reduces the margin one for one.
How should I measure weighed goods?
By weight both when booking in and when writing off, not by unit. With weighed products shrinkage is often not disappearance but small, repeated imprecision — and that can only be shown in the same unit of measure.
Boltom App splits shrinkage into its four causes.
It isn't for investigating anyone: shrinkage becomes workable because staff consumption, waste and till differences are recorded separately, with names and reasons — so what remains really is the unexplained part.
- Staff consumption by name, in three taps — not in a notebook, not after the fact.
- Daily waste with a reason and totalled in money: that is the part ordering can fix.
- Shift close with opening float and difference, by employee — not discovered the next morning.
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