Also called inventory shrinkage, stock loss, stock shortage
Shrinkage is the gap between the stock your records say you have and what is really on the shelf. It comes from shoplifting, staff theft, breakage, expiry, short deliveries that were never caught, and billing mistakes such as scanning the wrong product.
Shrinkage comes straight out of profit. On a thin grocery margin, losing 1% of stock can wipe out a large share of what you earned on those sales. You cannot fix it until you measure it, and you can only measure it by counting regularly.
A store with ₹40 lakh of yearly sales at cost finds a gap of ₹60,000 in its counts, a shrinkage of 1.5%. Recording each adjustment with a reason, such as damaged, expired or missing, shows where the loss really comes from. Okount keeps adjustment reasons in each product's stock history.