AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Shrinkage is the gap between the stock your records say you should have and the stock you actually have, valued at cost and shown as a percentage of sales. Control it by measuring it monthly, splitting it into theft, expiry and damage, and admin or till error, and setting a target for each cause based on your own baseline rather than a borrowed figure.
Every supermarket loses stock. What separates a healthy store from a struggling one is whether the loss is measured, explained and shrinking month by month. Shrinkage hides inside gross margin: if you price for a 20% margin and lose 3% of sales to shrink, your real margin is closer to 17%. This guide covers how to measure it, where it comes from, and the controls at the shelf and till that bring it down.
Measure it before you fight it
Shrinkage is book stock minus counted stock, valued at cost. Express it as a percentage of sales for the same period so months compare fairly.
- Book stock
- Opening stock + purchases received − cost of goods sold
- Counted stock
- What a physical count finds, valued at cost
- Shrinkage %
- (Book stock − counted stock) ÷ sales × 100
Value stock consistently. IAS 2, the inventory standard many Nigerian companies report under, measures stock at the lower of cost and net realisable value, so expired or damaged lines that cannot be sold should be written down when that happens, not left in the books at full cost.
Setting targets from your own baseline
There is no official Nigerian shrinkage benchmark, and figures quoted online often come from foreign retail surveys with different conditions. The safer method is to measure three months, split the loss by cause, and set a reduction target for each. For example, if expiry is 1.2% of sales and theft 0.6%, a six-month target might be expiry under 0.8% and theft under 0.4%. Count high-risk lines weekly so you see movement early.
| Cause | How it shows up | Main control |
|---|---|---|
| Customer theft | Missing small, high-value items: toiletries, spirits, batteries | Placement, tagging, staff on the floor |
| Staff theft | Losses on specific shifts or tills | Separation of duties, CCTV, void and refund approvals |
| Expiry and damage | Written-off stock in fresh, dairy, bakery | First-expiry-first-out, daily date checks, markdowns |
| Supplier short delivery | Invoiced quantity higher than received | Count and sign at the receiving door |
| Till and admin error | Wrong prices, wrong codes, missed scans | Price audits, barcode checks, blind counts |
Controls at the shelf
- Put high-risk items where staff can see them. Behind the counter or in a locked cabinet for spirits, baby formula and phone accessories; near the till for small toiletries.
- Rotate on expiry, not arrival. Pull older stock forward when shelves are filled. Check dates on dairy, bread and chilled lines every morning.
- Mark down early. A product sold at 30% off two days before expiry recovers more than one thrown away. Record every markdown so it is not mistaken for theft.
- Take expired stock off sale. NAFDAC sealed 18 warehouses in Bida, Niger State, in February 2026 over expired food and drinks, and supermarkets in Minna were also sealed, Nairametrics reported. Selling expired goods is a regulatory risk as well as a loss.
- Count at the receiving door. Check deliveries against the purchase order, not the supplier's invoice, and sign only for what arrived. Short deliveries signed for become your shrink.
Controls at the till
Till losses are often a mix of error and dishonesty. The controls are the same for both:
- Voids, refunds and price overrides need a supervisor's code; review the log daily.
- No cashier processes a refund for their own sale.
- Blind counts at the end of every shift, with a written variance log (see cashier cash-handling rules).
- Regular price audits: scan 20 random items a week and compare with shelf labels. Section 123 of the Federal Competition and Consumer Protection Act 2018 treats in-store displays as representations by the business, so a shelf price that differs from the till price is a consumer protection issue too.
- Watch for sweethearting: a cashier scanning only some items for a friend. Compare items per basket by cashier over a month.
Staff theft is the hardest cause to talk about and the one most often blamed on customers. Keep the conversation about systems, not suspicion: when losses cluster on one shift, change the controls on that shift first (who receives, who approves voids, who holds the stockroom key) and watch whether the numbers move. Rotating duties, so no one person both receives and counts the same stock, removes the easiest opportunity.
Steps for the next 30 days
- Do a full stock count and set your opening shrinkage figure.
- Start a write-off book: every expired, damaged or markdown item, by date and line.
- Pick your 30 highest-loss lines and count them weekly.
- Introduce supervisor codes for voids and refunds.
- Review shrinkage by cause at month end and set next month's targets.
Where Pryme fits
Fewer cash sales mean fewer till errors to explain. Pryme's bank-transfer checkout lets customers pay at the till by transfer, and the Finance agent can prepare stock and takings reconciliations for a manager to approve. For seasonal stock risk, see festive stock planning.
Questions people ask
What is a normal shrinkage rate for a supermarket in Nigeria?
There is no official Nigerian benchmark. Measure your own rate monthly as a percentage of sales, split it by cause, and set targets to reduce each cause from that baseline.
How do I calculate stock shrinkage?
Take book stock (opening stock plus purchases minus cost of goods sold), subtract counted stock at cost, and divide by sales for the period, then multiply by 100.
How can I reduce expired goods in my supermarket?
Rotate stock on expiry date, check dates daily on fresh and chilled lines, mark down before expiry, and order smaller quantities of slow lines.
Is it illegal to sell expired food in Nigeria?
NAFDAC treats expired food as unfit for sale and has sealed warehouses and supermarkets over it, as reported in February 2026. Remove expired stock from shelves at once.
Sources
- IFRS Foundation: IAS 2 Inventories · accessed Oct 2026
- Nairametrics: NAFDAC seals 18 warehouses in Niger over expired food products (20 Feb 2026) · accessed Oct 2026
- LawGlobalHub: section 123 FCCPA 2018, false or misleading representations · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.