Retail inventory shrinkage (or just “shrink”) is the loss of goods due to theft, damage, or errors in a store’s stock records. It creates a gap between the inventory a store should have and what is actually available, leading to lost sales and reduced profits. Shrinkage can result from shoplifting, employee theft, mishandling, or administrative mistakes. Retailers combat shrinkage through security measures, staff training, and precise inventory tracking to safeguard their revenue.