A new survey has found that retailer’s shrinkage in 2015 jumped to $45.2 billion or 1.38 percent of retail sales.
The 2016 National Retail Security Survey reported that 47 percent of retailers surveyed said that inventory shrinkage increased and shoplifting was the number-one reason. Shoplifting accounted for an average loss of $377 per incident, an increase of nearly $60 from 2014.
“With a constantly evolving retail landscape, loss prevention becomes more complex every day,” said NRF vice president of loss prevention Bob Moraca. “LP [loss prevention] professionals have been working diligently to find advancements in technology aimed at deterring crime in our industry, sometimes even before it happens — but as our techniques get more sophisticated, so too do the criminals.”
Randy Dunn, national sales director, retail store performance at Tyco Retail Solutions, believes that it’s actually improving retail technology that is causing businesses to realize that their shrinkage is bigger than they thought it was.
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“The basic model for keeping inventory safe is a pretty good working model,” Dunn said. “The tag is a pretty strong deterrent.” He said that with better inventory tracking, retailers have shortened the cycle to learn where the real losses are. “Instead of manually counting inventory a few times a year, they can address the issue more quickly,” Dunn said. “Macy’s can scan the store monthly now.”
NRF’s study found that employees may be becoming more honest as their theft levels dropped from $1,546 to $1,233. Apprehensions increased, but prosecutions and terminations declined.
Dunn thinks retailers are going to face new shrinkage problems as they shift online order fulfillment to the stores. “Retailers aren’t anxious to publicize this,” he said. “You have more product leaving the stores in these brown boxes and what is in that brown box?” He suggested employee theft is happening with product being shipped out to family and friends.
“One store shipped out a million worth of inventory because the employee used an override and hand wrote a label,” Dunn said. “It was a million dollar loss and they didn’t know how it happened.”
These elevated numbers are causing retailers to hire more professionals to address the problem. NRF’s survey found that loss prevention personnel increased in 2015 with the loss prevention employees accounting for 34.5 percent per $1 billion in sales.
So, while the retailers haven’t been able to decrease the amount of inventory shrinkage, they are getting better at learning where its coming from, which will allow them to target that theft.