Shrinkage on the Rise

Preliminary results of the latest National Retail Security Survey, released at the recent National Retail Federation’s Loss Prevention Conference and Expo, show that retail shrinkage increased to 1.58 percent of retail sales in 2010, up from 1.44 percent in 2009.

The survey is a collaborative effort between NRF and the University of Florida. Dr. Richard Hollinger, UF professor of criminology and the survey’s author, revealed the preliminary findings at the conference.

According to the survey, total retail losses cost retailers $37.1 billion last year, up from $33.5 billion in 2009. NRF’s recently released Organized Retail Crime survey found that 95 percent of retailers have been a victim of organized retail crime over the last 12 months.

“Increased shoplifting and shrink rates mirror what retailers are seeing with professional and organized crime rings,” said NRF senior asset protection advisor Joe LaRocca. “Retailers are continuing to put resources in place to fight these self-serving and unethical criminals who walk out with billions of dollars in unpaid merchandise every year.”

According to the preliminary survey findings, the majority of retail shrinkage last year was due to employee theft, at $16.2 billion, accounting for 43.7 percent of total losses. Retailers reported that 18.7 percent of cases involved collusion between internal and external bad actors. Retailers lost $12.1 billion to shoplifting, which is 32.6 percent of total losses. Other losses included administrative error ($4.8 billion and 12.9% of shrinkage) and vendor fraud ($2 billion and 5.4% of shrinkage). Retailers said that the cause of the remaining shrinkage was unknown.

The study, which surveyed 124 retailers in the first half of 2011 and uses data from 2010, is the result of a partnership between the University of Florida and the National Retail Federation.