According to University of Florida criminologist Richard C. Hollinger, Ph.D., who directs the National Retail Security Survey, the results indicate that in 2000, retailers lost 1.75 percent of their total annual sales to shrink, up from 1.69 percent the prior year. Hollinger said that the results of the survey should serve as a wake-up call to the retail industry that shrinkage continues to be a multi-billion dollar source of revenue loss.
Where Inventory Shrinkage Happens
- Employee Theft 46%
- Shoplifting 30.6%
- Administrative Error 17.6%
- Vendor Fraud 5.8%
The study, conducted by the University of Florida with a funding grant from ADT Security Services, Inc., a unit of Tyco Fire and Security Services, discovered that retail security managers attributed more than 46 percent of their losses to the thefts of disgruntled workers. In comparison, 31 percent of retail losses were the result of shoplifters. Employee theft was up 2 percentage points from the previous study.
Internal theft now costs U.S. retailers $14.9 billion annually, compared to shoplifting costs of $10 billion. Employee theft and shoplifting combined account for the largest source of property crime committed annually in the United States.
The remainder of the annual retail losses are due to paperwork errors at 17.6 percent and theft by vendors at 5.8 percent, according to the data obtained by analyzing theft incidents from 116 of the largest U.S. retail chains.
"Given that the surveyed portion of the retail economy annually transacts over $1.845 trillion dollars, this percentage of loss is worth over $32 billion," Hollinger said. "This means that the single largest category of larceny in the United States is the crime that occurs in retail stores. This figure is larger than motor vehicle theft, bank robbery or household burglary combined."
"With the uncertainty in consumer confidence and warnings of a slow shopping season, retailers need to look beyond the selling floor to increase and protect their profits," said Mike Snyder, president of ADT Security Services. "Technologies such as anti-shoplifting systems, digital video surveillance and point of sale monitoring solutions, tied together with remote and central station monitoring, will help retailers contain some of these losses without sacrificing good customer service."
What can retailers do to deter shoplifters and employee theft?
- Provide good customer service
- Use anti-shoplifting systems
- Use video surveillance
- Improve job satisfaction levels of retail sales associates
- More...
"In today's environment of heightened awareness about increased security measures it's becoming increasingly important for retailers to address the security lapses that allow these kinds of losses. In the end, it is the consumers who will have to pay the price for shrinkage in the form of higher retail prices," Hollinger concluded.
