Few lines on an income statement are as concrete as a case of product that arrived, took up space, consumed labor, and never became a sale. A loss is profit that was purchased but never realized.
The Problem Behind the Number
Calling everything “shrinkage” impoverishes the diagnosis. There is known loss, theft, data entry error, expiration, damage, temperature failure, overproduction, receiving discrepancies, and stockouts caused by phantom inventory. Each origin demands a different owner and countermeasure.
NUMBER THAT MATTERS
- Brazilian retail losses were estimated at R$36.5 billion, with a general rate of 1.51%. Source: ABRAPPE/KPMG, 2024.
- Supermarkets, pharmacies, and cash-and-carry stores recorded upward pressure on losses. Source: ABRAPPE (Brazilian Association for Loss Prevention)/KPMG, 2024.
The numbers above are not interchangeable: each source works with its own period, panel, and methodology. They serve as converging or contrasting signals, not as a single statistical series.
Proven Fact, Observed Trend, and Hypothesis
Proven facts. These are the data attributed to the indicated sources and years. They describe the samples and periods studied.
Observed trend. A joint reading points to a change in basket composition, greater pressure on productivity, and the need to manage price, volume, mix, and availability separately. A trend is not destiny: format, region, and audience may behave differently.
Author's hypothesis. My hypothesis is that chains tolerate losses because the number arrives aggregated and late. When the team sees the product, the cause, and the shift, the loss ceases to be a corporate statistic and becomes an operational decision again.
Impact on Operations
IMPACT ON OPERATIONS
Every shift in consumption ends in concrete decisions about purchasing, inventory, pricing, planograms, staffing, production, replenishment, and service. If the indicator doesn't reach these routines, it hasn't yet turned into management.
- Measure loss by cause, category, store, shift, and supplier.
- Connect purchase orders, receiving, expiration dates, production, display, and disposal.
- Transform cycle counts into a management routine, not a closing rush.
- Give stores autonomy with limits and logging for markdowns and opportunity sales.
Opportunities for Operators
The gain lies not in an annual campaign, but in a daily cadence: a short meeting, a prioritized cause, an action with an owner, and a follow-up check. Perishables require forecasting by the hour and weather; grocery requires accuracy; prevention requires process design beyond surveillance.
The application should start small: select comparable stores, define a hypothesis, establish a baseline, test for a sufficient period, and measure the total effect—including transfer between items, loss, availability, and additional labor. Scaling without this design transforms opinion into cost.
WHAT I WOULD TRACK
Revenue, volume, units per transaction, frequency, contribution margin after losses, availability of critical items, and operational productivity. The priority changes by theme, but none of these indicators should be read alone.
Questions for Managers
QUESTION FOR THE MANAGER
- How much of the loss originates before the product reaches the shelf?
- Which ten SKUs concentrate the lost value, not just the percentage?
- Does the team's incentive reward gross sales or the result after losses?
Conclusion
The transformation of food retail doesn't just happen in strategic presentations. It appears on the dock, in the stockroom, on the shelf, in the price, in the queue, and in the cart. The role of leadership is to distinguish noise from structural change and convert insights into operational routine.
Sources Consulted
- Brazilian retail losses were estimated at R$36.5 billion, with a general rate of 1.51%. Source: ABRAPPE/KPMG, 2024.
- Supermarkets, pharmacies, and cash-and-carry stores recorded upward pressure on losses. Source: ABRAPPE/KPMG, 2024.
Continue This Discussion
- A Stockout is a Sale Your Competitor Appreciates
- More SKUs or More Results? When an Excessive Assortment Starts Costing Money
- Revenue Grows, Volume Falls: The Trap That Can Deceive the Retail Manager
About the Author
Kesler Soares Pereira
Operations and Commercial Management Executive | Psychoanalyst | Human Development
An executive with experience in food retail, cash-and-carry, operations, commercial management, and people management. His perspective combines store routines, indicator discipline, and human behavior to transform consumer signals into business decisions.