Shrinkage rate
Shrinkage rate is the cost of stock that leaves inventory without being sold — through spoilage, breakage, expiry, preparation loss or unexplained loss — as a share of net sales.
Also calledshrink rate, inventory loss rate, fire oranı
Formula
Shrinkage cost ÷ Net sales × 100- Shrinkage cost
- Recorded write-offs plus unknown loss from the stock count, both at cost. In Turkish retail the term fire covers spoilage, breakage and preparation loss as well as unexplained loss.
- Net sales
- Sales for the same period, excluding VAT and net of returns.
Calculator
Enter your own figures and the result updates instantly. The defaults are the figures from the worked example below.
Result%1,8
Worked example
How to read it, and what good looks like
Shrinkage has two sources and each is managed separately. Known shrinkage is recorded with its reason when it happens: expiry, spoilage, breakage, preparation loss. Unknown shrinkage only shows up at the count; it comes from theft, recording errors or write-offs nobody booked. The larger the unknown share, the more the problem sits in the process rather than the stock.
"What should shrinkage be?" depends on category and format; the target comes from the business's own twelve-month distribution and from the best-performing branch in the same category. There is no recent public measurement for Turkey. According to the Sensormatic/Tyco index cited by the Turkish Retailers Federation (TPF) in 2018, loss as a share of sales was 1.79% in regional chains and 1.73% in hypermarkets. That measure covers theft and administrative error, not all fresh-food spoilage.
Record shrinkage daily and read it weekly by category and branch; for any line over threshold, review the order multiplier and rotation. In Mindpera, Mind Stock takes write-offs with a reason code, raises an alert when the category or store shrinkage rate breaches its threshold and turns the variance into an accounting voucher. Where write-off records are split between the ERP and handheld terminals, installation ties them into one model.
| Context | Value | Note |
|---|---|---|
| Regional chains, loss as a share of sales (Sensormatic/Tyco index, cited by TPF) | 1.79% | Published 2018; causes: external theft 34.34%, supplier 24.28%, employee 22.95%, administrative error 18.43%. |
| Hypermarkets, loss as a share of sales (same source) | 1.73% | Published 2018. |
| Turkey, Global Retail Theft Barometer 2013-2014 | 0.99% | Old data; global average 1.29%. No recent Turkish measurement exists. |
Where it misleads
- Shrinkage is valued at selling price; the rate is inflated by the margin and category comparisons break down.
- A zero-shrinkage target is set: in fresh categories that means empty shelves at closing time and a lost sale that is never recorded.
- The shrinkage target is tied one-way to a bonus; write-offs stop being recorded and the loss moves into the count variance.
Data you need
- Write-off records with reason codes (handheld terminal or write-off slip)
- Stock count result and frozen system balance
- Unit cost per product
- Net sales excluding VAT
Mindpera products that calculate this KPI
Mind Stock
Stop treating stock accuracy as something that waits for a count and a month-end close. See movements in and out, expiry dates and profitability on one screen.
Mind Cost
The cost of what you buy for the shelf and the cost of what your bakery, deli and kitchen produce are calculated on the same model; in both, where the gap comes from is visible line by line.
Mind Ops
Run audits and performance across your grocery branches from one place, with a set of more than 100 KPIs. Audits, reporting and camera event tracking meet on the same screen.
Frequently asked questions
- How is preparation waste calculated in the deli and butchery departments?
- Subtract saleable output from the quantity that entered the department and divide by that input. If 100 kg of whole cheese yields 94 kg of saleable product after slicing and packing, preparation waste is 6% and yield is 94%. Shelf price and unit cost are calculated on that yield; actual waste is compared with expected waste and the gap is tracked by department, shift and product.
- Is shrinkage the same as stock count variance?
- No. Shrinkage covers every non-sale exit from stock, recorded or not. Count variance is the gap between the system balance and the counted quantity, and it is where unknown shrinkage becomes visible. Recorded write-offs do not appear in the count variance; if the variance keeps growing, write-offs are not being booked, goods are going missing or recording errors are building up.