In its annual study of industry inventory “shrink,” the National Retail Federation and the University of Florida said thefts in the industry swelled to $48.9 billion in 2016, which represents 1.44 percent of total sales. This compares to $45.2 billion, or 1.38 percent of sales, in 2015.
The NRF and university researchers said the increase comes “as budget constraints left retail security budgets flat or declining.”
Bob Moraca, vice president of loss prevention at the NRF, said retailers are “proactive in combatting criminal activity in their stores, but acknowledge that they still have a lot of work left to do. 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 NRF said 48.8 percent of retail industry respondents said they experienced “increases in inventory shrink, while only 16.7 percent said it remained flat.” The NRF noted that “shrink was divided into shoplifting and organized retail crime (36.5 percent), employee theft/internal (30 percent), administrative paperwork error (21.3 percent) and vendor fraud or error (5.4 percent).”
The study revealed that crime involving shoplifting garnered the greatest losses by averaging nearly $800 per incident, which is more than double the figures from 2015. “Part of the increase came because some states have raised the threshold for crimes to be considered a felony, meaning that only larger thefts are reported,” the NRF researchers said in the report. “But the rise was also attributed to retailers allocating smaller budgets for loss prevention, leaving them with fewer security staff to fight the thefts.”
By average cost of incident, employee theft came in at more than $1,900, which is up from about $1,200 in 2015. Retail robberies declined, however, falling to an average cost per incident of about $5,300 from $8,170 in the prior year’s report. In this year’s study, respondents were asked about return fraud, which showed an average loss per incident of about $1,800.
Richard Hollinger, a University of Florida criminology professor who served as lead author of the report, said the seriousness of retail theft is “much greater than most customers realize. 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.”
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