News Feature | June 28, 2017

New Survey Finds Retail Shrink Increased To $48.9 Billion In 2016

Christine Kern

By Christine Kerncontributing writer

CompTIA Tech Trends

While retailers are being proactive in combatting crime, much work remains to be done.

Retail shrink increased to $48.9 billion in 2016, according to the findings of a new survey from the National Retail Federation (NRF) and The University of Florida. The study also found that thefts amounted to 1.44 percent of sales, an increase from 1.38 the year before. This growth came even as retailers are taking steps to be proactive against loss while budget constraints meant security budgets remained flat or actually declined.

“Retailers are proactive in combatting criminal activity in their stores but acknowledge that they still have a lot of work left to do,” explained Bob Moraca, NRF Vice President of Loss Prevention. “The job is made much more difficult when loss prevention experts can’t get the money they need to beef up their staffs and resources. Retail executives need to realize that money spent on preventing losses is money that improves the bottom line.”

The report found that two-thirds of LP budgets remained flat or decreased, while over half anticipate LP staff to remain flat. 

Additionally, inventory shrink included shoplifting/external theft (including ORC) of 36.5 percent; employee/internal theft at 30 percent; administrative and paperwork errors at 21.3 percent; vendor fraud or error at 5.4 percent; and unknown loss at 6.8 percent.

Shoplifting continues to be the leading cause of shrink, at an average of $798.48 per incident, an increase from $377 in 2015. The average loss from employee theft also rose from $1233.77 in 2015 to $1922.80 in 2016, while the average cost of retail robberies fell from $8170.17 in 2015 to $5309.72 in 2016. The report also included questions regarding return fraud for the first time, and found an average loss of $1,766.27.

“The seriousness of retail theft is much greater than most customers realize,” said Richard Hollinger, a veteran University of Florida criminology professor and the lead author of the report. “When criminals steal from retailers, consumers pay higher prices, the safety of innocent employees can be compromised and shoppers looking for popular merchandise often cannot find it. Retailers need to continue to invest in new technologies to prevent and prosecute these crimes.”

This was the 26th annual National Retail Security Survey, which polls retail loss prevention professionals regarding inventory shrink, employee integrity, external retail crime, and more.