News Feature | July 6, 2015

Retailers Lost $44.02 Billion In Shrink In 2014

By Brianna Ahearn, contributing writer

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The 24th annual National Retail Secury Survey (NRSS) administered by the National Retail Federation (NRF) shows retail and security providers exactly how much shrink affected retailers in 2014. The national study looks at a variety of topics including employee integrity, inventory shrink and other concerns. The study is the result of a partnership between the University of Florida, with the report sponsored by The Retail Equation. NRF shared excerpts from the report in a press release. The study, with responses from 100 senior loss prevention executives, was conducted in March and April. The findings should illuminate topics of concern for retailers, and examine what issues they need to consider for preventing high levels of shrink.

“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,” says NRF President and CEO Matthew Shay. “Retailers will continue to review best practices and work to better educate decision makers in Washington about the burdens these crimes place on consumers, retail companies, their employees and the economy.”

Retailers surveyed say that their inventory shrink average 1.38 percent of retail sales, a figure of $44 billion in 2014. An estimated 38 percent of reported shrink was attributed to shoplifting. However, shoplifters weren't the only source of missing inventory, as employee and internal theft made up 34.5 percent of shrink. Administrative and paperwork represented 16.5 percent, followed by vendor fraud or error at 6.8 percent and unknown loss at 6.1 percent. 

The survey respondents represented a wide selection of industry categories, including specialty women's and women's apparel, toys, furniture, home improvement, auto parts, and other categories. A majority of the retailers who participated made $1 billion to $2.49 billion in sales for 2014 (23.4% of respondents), and 28.1 percent had 50 to 200 stores. The report shows that averages for shrink differ between categories, such as grocery stores and supermarkets having somewhat lower than average shrinkage from shoplifting (29.67% versus the industry average of 38.0%), and more than average for shoplifting, including organized retail crime (average of 49.8%).

Loss prevention is a significant part of reducing shrink, especially by shoplifting, and the survey looked at how much a budget was allocated to loss prevention. 39.4 percent of respondents said their budget for 2015 was increased compared to the amount allotted for last year. One third (36.6%) said their budget would be similar to last year, and 23.9 percent said they would have decreased resources. The biggest takeaway for this segment of retail is the survey found that loss prevention budgets in 2014 averaged less than 1 percent of overall sales for the year.

“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,”  says NRF Vice President of Loss Prevention Bob Moraca.