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Retailers Lose 1.4% Of Sales To Shrink: NRF

Washington – Retailers lost $44 billion to inventory shrink last year, a new security survey reveals.

The disappearing merchandise, which was lost to shoplifting, employee and vendor theft, and administrative error, averaged 1.4 percent of retail sales, the National Retail Security Survey (NRSS) shows.

Produced by the National Retail Federation (NRF), here, and the University of Florida, the survey showed that shoplifting accounted for the largest part of reported shrink in 2014, or 38 percent of losses, according to retailer estimates.

 “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,” said NRF loss prevention VP Bob Moraca. “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.”

After shoplifting, the greatest inventory loses were to employee/internal theft (34.5 percent); administrative and paperwork errors (16.5 percent); vendor fraud or error (6.8 percent); and “unknown loss” (6.1 percent).

Despite the $44 billion hit, University of Florida criminology professor Dr. Richard Hollinger, lead author of the survey, said the shrink percentage was the lowest in the project’s 24-year history.

“Loss prevention professionals have done a commendable job of elevating the issue of shrink and retail fraud within their own companies and with industry insiders and the public, but the battle wages on to find ways to contain further losses to their businesses,” Hollinger said. “As retail issues like shrink and security become more complex, retailers should continue to work together as an industry to ensure continued partnerships, with the end goal of finding the most effective asset protection solutions possible.”

The study, sponsored by The Retail Equation, which develops retail transaction optimization software, was presented at last month’s NRF Protect conference, touted as the largest retail loss prevention event on the continent.