Survey: U.S. Retailers Losing $31 Billion to Theft

BOCA RATON, Fla. - Inventory shrinkage from employee theft, shoplifting, vendor fraud and administrative error cost the nation's retailers $31.3 billion last year, according to the new National Retail Security Survey, which analyzed theft incidents from 118 of the largest U.S. retail chains. The annual survey was conducted by the University of Florida with a funding grant from ADT Security Services, Inc., a unit of Tyco Fire & Security.

In 2001 retailers lost 1.7 percent of their total annual sales to inventory shrinkage.

"For the second year in a row, employee theft hit record levels, with retail security managers attributing over 48.5 percent of their losses this year to theft by disgruntled workers," said University of Florida criminologist Richard Hollinger, Ph.D. "Translated into dollars, employee theft cost retailers a record $15 billion."

Hollinger said in comparison, 31.7 percent of retail losses were the result of shoplifters, which cost retailers $9.7 billion in lost revenues. The remainder of retailer losses was due to paperwork errors (15.3 percent) and theft by vendors (5.4 percent).

Mike Snyder, president of ADT Security Services Inc., said controlling losses from retail theft is even more critical during the holiday shopping season when stores are more crowded and are often staffed with temporary workers.

"The holiday shopping season is really a make or break season for many retailers. It is also an extremely busy time, which leaves stores more vulnerable to theft," Snyder said. "Many retailers are using security technologies such as anti-shoplifting, digital video and point-of-sale systems to help their staff zero in on theft problems."

Among the newest security technologies being used by retailers this year to control losses due to theft:

-- Point-of-sale data mining software solutions that detect potential theft problems at the cash register and alert appropriate personnel in real-time.
These data mining packages can be tied to digital video recorders.

-- Source tagging programs where tiny anti-theft labels about the size of a paperclip are placed inside an actual product or product package, effectively hiding it from view.

-- Self-alarming anti-theft tags that broadcast an audible alarm throughout the store when a shoplifter attempts to improperly remove it from merchandise.

"Stores that utilize security technologies generally have lower overall inventory shrinkage than those retailers who do not," Snyder said. "Technology also allows employees to focus more time on assisting customers and less on patrolling the aisles."
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