Legal Definitions - shrinkage

Shrinkage is when a business loses inventory due to theft, breakage, or waste. This means that the amount of inventory the business has is reduced.

For example, if a store has 100 shirts in stock but 10 of them are stolen, the store's inventory has shrunk by 10%. Similarly, if a restaurant has a lot of food waste because they over-prepared, their inventory has shrunk because they can no longer sell that wasted food.

Shrinkage can be a big problem for businesses because it means they are losing money and resources. It's important for businesses to take steps to prevent shrinkage, such as installing security cameras or training employees on proper inventory management.