Retail Shrink Tops $44 Billion In 2014
By Christine Kern, contributing writer
Retailers lost $44 billion as a result of shoplifting, employee and vendor theft, and administrative error (collectively called inventory shrink) in 2014, totaling 1.38 percent of total sales. This is according to a study released by NRF PROTECT, the industry’s largest retail loss prevention event. The report was sponsored by The Retail Equation.
The report found that shoplifting was responsible for the largest part of shrink (38 percent); followed by employee/internal theft (34.5 percent), administrative and paperwork errors (16.5 percent), vendor fraud or error (6.8 percent), and unknown loss (6.1 percent).
While some might thing that the study’s findings represent high rates, Richard Hollinger, criminology professor at the University of Florida and lead author of the National Retail Security Survey for the past 24 years, commented in a press release that last year’s shrink percentages are the lowest seen in the survey’s history. He commends loss prevention pros, but challenges them to find ways to decrease those percentages even further. “As retail issues like shrink and security become more complex, retailers should continue to work together as an industry to ensure continued partnerships, with the end goal of finding the most effective asset protection solutions possible,” he says.
“Retail loss prevention professionals have one of the hardest jobs in the industry – protecting their customers, employees and merchandise from the threat of harm and fraud, and the results of this survey prove the enormity of their task,” NRF president and CEO Matthew Shay explained in the release. “Retailers will continue to network with each other and educate decision makers in Washington about the burdens these crimes place on consumers, retail companies, their employees and the economy.”
NRF VP of loss prevention Bob Moraca stated, “Though we are encouraged by the partnerships forged with law enforcement over the years and advances in technology that will help deter a crime before it happens, criminals continue to thwart much of the progress retailers have made thus far.”
A separate study, the 27th Annual Retail Theft Survey conducted by Jack L. Hayes International, found 25 large retailers caught more than 1.2 million shoplifters and dishonest employees, recovering more than $225 million from them, in 2014.
In 2014, “shoplifting apprehensions rose 7.4 percent, while dishonest employee apprehensions rose 1.7 percent. The dollars recovered from apprehended shoplifters and dishonest employees also rose, 7.5 percent and 18.1 percent respectively", said Mark R. Doyle, president of Jack L. Hayes International, adding there have been similar increases the past three years.
The NRF PROTECT study found that 39.4 percent of those surveyed say their loss prevention budget for 2015 increased over last year; while just over one-third (36.6 percent) said their budgets would be similar to what they were last year — leaving 23.9 percent of respondents with decreased resources.