Loss prevention and retail industry professionals have a responsibility to stay informed about the latest retail theft statistics. This post provides a snapshot of what retailers currently face when it comes to loss and theft.
Inventory shrinkage refers to the difference between the merchandise a retailer shows in its records and the actual physical count of merchandise on hand. This difference can be attributed to operational errors, internal loss, and/or external loss. Shrink is an inevitability in the retail environment, but loss caused by retail theft is something LP and asset protection professionals work hard to prevent.
Results from 2017 National Retail Security Survey (NRSS), which were released just before the National Retail Federation’s (NRF) PROTECT conference in June 2017, report that inventory shrink accounted for 1.44 percent of retail sales, or $48.9 billion, in 2016. This is up from 1.38 percent ($45.2 billion) in 2015.
In addition, nearly 49 percent of retailer participants reported an increase in inventory shrink in 2016.
The NRSS is the result of a collaborative effort with the University of Florida and has been overseen by Dr. Richard Hollinger for 25 years.
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Shoplifters and Organized Retail Crime
Shoplifting and organized retail crime are major contributors to the external loss component of inventory shrink. The NRSS indicates that shoplifting accounted for 36.5 percent of the reported shrink in 2016—by far the largest contributing factor to retail loss in the survey. The average loss doubled from the previous year to nearly $800 per shoplifting incident, up from about $377 in 2015.
For the first time in 2017, the NRSS also reported an estimated impact of return fraud as a cost to retailers of more than $1,700 per incident.
The annual retail crime survey put forth by the British Retail Consortium in 2017 reports that the direct cost of retail crime in the UK has risen to over £700 million (~$978 million), a 6 percent increase over the previous year. The overall cost of theft by customers reportedly surged by 15 percent over 2015. The BRC estimates that nearly three-quarters of the total cost of retail crime is caused by external theft.
Employee theft, also known as internal theft, occurs when employees steal from the organization where they are employed. Retailers that participated in the 2017 NRSS say that employee/internal theft amounted to 30 percent of inventory shrink in 2016. The report also found that the average loss of dishonest employee cases increased from $1,233.77 to $1,922.80.
Other Retail Theft Statistics
According to the Jack L. Hayes International 29th Annual Retail Theft Survey, more than 438,032 shoplifters and dishonest employees were apprehended in 2016 by 23 major retailers. These shoplifter apprehensions showed a decrease of 0.2 percent over 2015, while dishonest employee apprehensions increased nearly 10 percent over 2015. More than $120 million was recovered from the thieves – up about 2.5 percent from 2015.
According to the report, for every $1 recovery made by the retailers that responded to the survey, $12.82 was lost to retail theft. Hayes International consultants therefore calculated that only 7.8 percent of total retail theft losses resulted in a recovery.
This article was originally published in 2016 and was updated April 24, 2018.
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