2014 Retail Shrink Estimated at $44 Billion Says New Study
It’s a whole lot of money down the drain.
A new study released yesterday by the National Retail Federation, or NRF, reveals that so-called retail shrink, which includes shoplifting, employee and vendor theft and organizational errors, was $44 billion, or 1.3% of retail sales, in 2014. The National Retail Federation/University of Florida National Retail Security Survey surveyed 100 senior loss prevention executives from different areas of retail in March and April 2015.
Those surveyed estimate that shoplifting was the biggest cause of shrink last year and accounted for 38% of the overall loss. “A common misperception about shoplifting is that retailers can ‘afford’ the loss of a candy bar or a pair of jeans, but the truth is that the industry loses billions of dollars each year at the hands of callous criminals that could be put towards human capital, promotions and other necessary business operations,” noted NRF vice president of loss prevention Bob Moraca in a statement. “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.”
Employee/internal theft was the second largest problem at 34.5%, followed by administrative and paperwork mistakes (16.5%) and vendor fraud or error (6.8%). Unknown loss accounted for 6.1% of the total.
Nearly 40% of those surveyed said that they increased their loss prevention budget for 2015 while 36.6% said it was more or less the same as last year’s. The remainder (23.9%) reported a decreased budget to battle shrink.
The methodology of the survey changed this year so comparable data from prior years was not available.
The report was sponsored by The Retail Equation was released from NRF Protect, the largest retail loss prevention expo and conference in North America. The latest edition ends its three-day run in Long Beach, Calif. today.