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Shrinkage rates keep increasing

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WASHINGTON — U.S. retailers collectively sustained a $48.9 billion hit from theft and other inventory shrinkage in 2016, according to the annual National Retail Security Survey. That’s an 8% increase from a year earlier and came as budget constraints prompted some retailers to cut spending on security, according to the survey, released last month by the National Retail Federation (NRF) and the University of Florida.

Last year’s losses amounted to 1.44% of sales, up from 1.38% in 2015.

“Retailers are proactive in combating criminal activity in their stores but acknowledge that they still have a lot of work left to do,” Bob Moraca, vice president of loss prevention at NRF, said in a statement. “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.”

According to the report, 48.8% of retailers reported increased inventory shrink in 2016, and 16.7% reported that it remained flat.

The report concluded that shoplifting and organized retail crime represented 36.5% of the loss in 2016. Another 30% was attributed to employee theft/internal, while administrative paperwork error represented 21.3% of the loss and vendor fraud or error accounted for 5.4%.

In dollar terms, shoplifting continued to account for the greatest losses, at an average of $798 per incident, up from $377 in 2015, according to the survey.
Part of that increase is due to decisions by some states to raise the threshold for crimes to be considered a felony, meaning only larger thefts are reported.

The report calculated that the average loss from employee theft was $1,922, a big jump from $1,233 a year earlier. The average cost of retail robberies was $5,309, down from $8,170 in 2015. Return fraud produced an average loss of $1,766 last year.

“The seriousness of retail theft is much greater than most customers realize,” explained Richard Hollinger, a criminology professor at the University of Florida and lead author of the report. “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.”

This year’s study was a partnership between Hollinger and NRF and was sponsored by The Retail Equation.


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