Report: Shrink Cost U.S. Retailers $44 Billion in 2014

Research conducted for the National Retail Federation surveyed 100 senior loss prevention executives from various sectors in the retail market during March and April of this year.

Newly released results of the 2015 National Retail Security Survey (NRSS) are being highlighted this week at the National Retail Federation’s Loss Prevention Conference & Expo (NRF PROTECT) in Long Beach, Calif.

Based on responses from 100 participating U.S. retailers, the survey found that inventory shrink averaged 1.38% of retail sales, or $44 billion, in 2014. Retailers estimate that shoplifting (38%) accounted for the largest part of reported shrink, followed by employee/internal theft (34.5%), administrative and paperwork errors (16.5%), vendor fraud or error (6.8%), and unknown loss (6.1%).

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The Univ. of Florida and NRF partner to conduct the nationwide survey each year, which is considered a key benchmark for retail loss prevention. The 2015 NRSS was carried out using a different methodology from prior years; thus, NRF did not have relevant data from previous studies to compare and contrast against this year’s results. However, almost two-thirds of retailers surveyed (62.7%) did report that average shrink rates decreased or remained flat in 2014.

When it comes to loss prevention budgets, 39.4% of those surveyed say their budget for 2015 increased over last year; just over one-third (36.6%) said their budgets would be similar to what they were last year, leaving 23.9% of respondents with decreased resources.

Dr. Richard Hollinger, criminology professor at the Univ. of Florida and lead author of the NRSS for the past 24 years, says this latest shrink percentage is the lowest seen in the survey’s history.

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“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,” Hollinger says. “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.”

The complete report is available for download on the NRF Web site; registration is required. Check out this slideshow for some of the study’s key findings, including results that shed light on the role electronic security systems are playing in the uphill battle against fraudsters.

About the Author

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Although Bosch’s name is quite familiar to those in the security industry, his previous experience has been in daily newspaper journalism. Prior to joining SECURITY SALES & INTEGRATION in 2006, he spent 15 years with the Los Angeles Times, where he performed a wide assortment of editorial responsibilities, including feature and metro department assignments as well as content producing for latimes.com. Bosch is a graduate of California State University, Fresno with a degree in Mass Communication & Journalism. In 2007, he successfully completed the National Burglar and Fire Alarm Association’s National Training School coursework to become a Certified Level I Alarm Technician.

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