Retail shrink at all-time high; rises more than $1 billion

Marianne Wilson
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Retail shrink  totaled $61.7 billion in 2019, up from $50.6 billion the year before, amid rising employee theft, shoplifting and organized retail crime (ORC).

That’s according to the annual National Retail Security Survey released by the National Retail Federation (NRF). Shrink averaged 1.62% of sales during 2019, up from 1.38% in 2018 after hovering around 1.4% over the past few years. 

The survey found that the number of cases was up, with an average 560 employee theft apprehensions per retailer surveyed (up from 323 last year) and 689 shoplifting/ORC apprehensions (up from 509).

“Between an increase in incidents and new ways to steal, shrink is at an all-time high,” NRF VP for research development and industry analysis Mark Mathews said. “Loss prevention experts are facing unprecedented challenges from individual shoplifters to organized gangs to highly skilled cybercriminals.”

Other findings from the report are below.

•Forty-nine percent of respondents said the largest increase in fraud occurred in stores, 26% said it happened online and 19% cited multichannel sales, including those where the purchase is made online but the merchandise is picked up in-store. 

•Typical fraud incidents range from the use of stolen credit cards or card numbers and gift card scams to the return of stolen merchandise for refunds.

•Of challenges that have grown in priority for LP teams over the past five years, 61% cited ORC, 59% ecommerce and cybercrimes, 58%  internal theft and 54%  return fraud. 

•To fight losses, retailers reported increased use of technology such as point-of-sale analytics, security cameras, wired alarms on high-value merchandise and online training for employees among other steps. 

•Additional technology resources were being allocated, according to 52% of those surveyed, while 36% said loss prevention budgets were increasing and 30% were adding LP staff.

Rising incidents of theft have coincided with a period when states have amended laws to increase the dollar threshold that constitutes a felony, which is more likely to be prosecuted than a misdemeanor, the report stated. 

Members of ORC gangs often make multiple small thefts, staying below the felony threshold to avoid prosecution, In response, NRF has called for repeat offenses to be aggregated and counted toward felony thresholds to reflect the serious nature of organized theft.  Shoplifting/organized theft and employee theft together typically account for about two-thirds of shrink each year.

The survey of 69 LP and asset protection executives from a variety of retail sectors was conducted February 24 through April 21. The study is sponsored by Appriss Retail.