Study: Retail theft higher with lower LP budgets

THOROFARE, N.J. According to survey results on loss prevention budgeting trends conducted by Preference Research and released by Checkpoint systems, a provider of supply chain solutions, there is strong correlation between reducing LP spending and increased retail shrink.

Preference Research anonymously surveyed 329 qualified subscribers of a national loss prevention magazine in May and found that 77% of respondents reported cutting or delaying spending in their LP budgets during past soft economies, with 61% reporting their spending was not restored to prior levels until after the recession. Another 33% indicated that their LP spending was not restored at all.

Furthermore, 38% of respondents reported that their annual LP budget had been delayed or cut after their budget plan was finalized, while only 8% reported an increase in their budget.

The majority of respondents correlated reduced LP spending with increased theft, with 68% reporting that shrink increased when LP spending was cut. Sixty percent of respondents expected merchandise shrink to increase as a result of reduced or delayed loss prevention budgets/spending, compared to 30% who said shrink would remain the same.

Survey results also indicated that most retailers have either increased their 2008 LP budgets over 2007, or maintained them at existing levels. Asked how their 2008 budgets compared with 2007, 32% responded that their budgets would be higher, 36% said their budgets would remain the same, and 32% responded that they were lowering their LP budgets.