Retail Shrinkage Cost Calculator 2025/26

UK retail shrinkage averages 1.2-1.8% of annual revenue according to the British Retail Consortium's annual survey. In absolute terms, the UK retail sector loses approximately £2-3 billion/year to shrinkage. Food retail typically sees higher rates (1.5-2.5%) due to self-service formats and perishability. Electronics and jewellery see lower rates but higher absolute values per incident. A 1.5% shrinkage rate on a £5 million turnover business represents £75,000/year in lost stock at retail value.

Most cost-effective loss prevention by ROI: (1) Staff awareness training — cheapest and addresses employee theft and admin errors; (2) Structured stocktaking (weekly cycle counts) — identifies losses early; (3) CCTV with monitored recording — deters customer theft and provides evidence; (4) EAS tagging on high-value items — reduces customer theft significantly for high-margin goods; (5) AI-powered self-checkout monitoring — reduces self-checkout theft which is a growing problem. Avoid over-investing in security theatre (security guards with no deterrent effect) — measure ROI on all loss prevention spend.

Employee theft (also called fidelity fraud) is typically covered by a crime or fidelity insurance policy, not a standard contents or stock insurance policy. Standard commercial combined policies may exclude employee theft unless specifically endorsed. Businesses with significant cash handling, high-value stock or many employees should review their policy wording carefully. Prosecution requires evidence — CCTV, stock records and witness accounts. Employers must follow a fair disciplinary process before dismissal, even for suspected theft.