IHL Group: The biggest source of retail loss is…
A new joint study from IHL Group and Sensormatic Solutions reveals where retail losses occur and how much money retailers are losing.
External theft and organized retail crime is the largest individual source of retail loss (25%), but “Beyond Shrink: 2026 Global Total Retail Loss Study” from IHL Group and Sensormatic Solutions also indicates that while it accounts for 26% of total loss among retailers generating $1 billion or more in revenue, for retailers with revenue under $250 million it drops to 17%.
In a related external theft/organized retail crime finding, the study shows that 71% of the largest surveyed retailers reported seeing increased shoplifting, compared with just 28% of the smallest retailers. And looking at internal loss, the study indicates administrative process errors cost an average of $103.40 per incident, close to the $107 average cost of an employee theft occurrence.
[READ MORE: NRF: Shoplifting declines but fraud schemes evolve]
“Investments in digital data collection and analytics systems have fundamentally changed retailers’ understanding of loss within their stores and supply chains,” said Greg Buzek, founder and president of IHL Group. “The impact of external theft and shoplifting, including organized retail crime is real, and it is rising globally — but it’s not where the majority of loss dollars actually go. The report identifies and quantifies this gap with new clarity, laying bare how outdated benchmarks and measures turn into tunnel vision, gaps in deterrents and lost opportunities.”
Findings in other areas include:
Supply chain
Return fraud increased for 68% of respondents, nearly matching the 69% overall reporting increased shoplifting in their retail locations. Even so, respondents ranked fraud prevention only fifth-most-important when prioritizing loss-related performance measures. Supplier fraud, warehouse/sales-area shrink and goods-receiving loss together account for 33% of total respondent losses.
Global organized retail crime trends
Australia reported the highest rate of organized retail crime growth in the study, with 80% of respondents reporting increases, while 71% of U.S. respondents and 67% of Spanish respondents also reported rising activity in this area, which IHL and Sensormatic analysis indicates is the fact organized retail crime is now an international challenge.
Prevention
The average loss prevention budget reported in the study is about 1.2% of sales, but respondents reporting spending above 2% of sales were the only cohort in the study to report more declines than increases across loss vectors. In addition, respondents that align staffing and monitoring to traffic patterns report better loss outcomes, with 91% citing peak traffic periods and 89% citing event-driven crowd surges as key drivers of loss.
“For years, the industry has understandably focused on the most visible forms of retail loss, but what’s readily visible doesn’t always provide a full picture,” said Tony D’Onofrio, president of Sensormatic Solutions. “This research shows that loss is moving across the enterprise into supply chains, returns, digital commerce and operational processes. The opportunity now is to use data, technology and a broader view of the business to understand where losses really occur, respond accordingly, and make retail better.”
The Beyond Shrink: The 2026 Global Total Retail Loss Study is based on the input of 915 retail decision-makers across regions.
