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U.S. Retail Losses From Shrinkage Cost $44B

Jun 24, 2015 8:17 AM   By Jeff Miller
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RAPAPORT... U.S. retailers lost $44 billion from inventory shrinkage in 2014, according to the National Retail Federation/University of Florida National Retail Security Survey. While the group has measured retail shrinkage annually, totaling up the cost of employee and vendor theft, shoplifting and administrative errors, the methodology changed for the latest survey so comparable figures were not available.

Retailers estimated that shoplifting accounted for the largest part of reported shrinkage in 2014 at 38 percent of the total, followed by employee/internal theft (34.5 percent), administrative and paperwork errors (16.5 percent), vendor fraud or error (6.8 percent) and unknown causes of loss (6.1 percent).

“Retail loss prevention professionals have one of the hardest jobs in the industry – protecting their customers, employees and merchandise from the threat of harm and fraud and the results of this survey prove the enormity of their task,” said NRF's president and CEO, Matthew Shay. “Retailers will continue to network with each other and educate decision makers in Washington about the burdens these crimes place on consumers, retail companies, their employees and the economy.”

Bob Moraca, NRF's vice president of loss prevention, explained that it is a misconception that retailers can absorb (or afford) the loss of an item here and there. "but the truth is that the industry loses billions of dollars each year at the hands of callous criminals that could be put toward human capital, promotions and other necessary business operations. 

“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,” he said.

Thirty-nine percent of U.S. retailers increased their loss prevention budget this year, while 36.6 percent said  spending would be in line with the previous year and 23.9 percent of retailers anticipate decreasing their resources, according to the survey. 

Dr. Richard Hollinger, a criminology professor at the University of Florida and lead author of the survey, added, “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. 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.”


 

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Tags: Jeff Miller, loss, National Retail Federation, prevention, retail, shoplifting, shrinkage, theft
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