Effects of physical stock loss on the financial performance of retail enterprises

Abstract

Method:A quantitative research approach in the form of a questionnaire was adopted and a non-probability, convenience sampling method was employed. Regression analysis was conducted using IBM SPSS (version 27) to test the hypotheses.Results: Stock spoilage and internal theft are the strongest predictors of profitability and sales volume loss. Conclusion:It is concluded that stock shrinkage as a cause of physical stock loss relates to the financial performance of retail SMMEs. However, not all physical stock loss variables carry the same weight in terms of their contribution to retail financial losses. Contribution:The study contributes to retail SMMEs and stock shrinkage literature by identifying the causes of stock shrinkage as a result of physical stock loss. It further sheds light on high predictor variables of physical stock loss which can threaten the financial sustainability of businesses.