Global Retail Theft Barometer Study Finds Shrink Cost Retailers

Shrink, comprised of shoplifting, employee or supplier fraud and administrative errors, cost the global retail industry more than $128 billion last year, $42 billion in the US alone, according to the latest Global Retail Theft Barometer. This represents 1.29 percent of retail sales, on average.

Per household retail crime across the 24 countries surveyed ranged from $74 to $541. The annual cost of shrink to US shoppers, as passed on from retailers, averaged $403 per household.

The study, underwritten by an independent grant from Checkpoint Systems, Inc., was carried out in 2014 by The Smart Cube and Ernie Deyle, a retail loss prevention analyst. It was based upon in-depth phone and written survey interviews conducted in 24 countries among 222 retailers representing $744 billion in sales in 2013.

According to the study, shrink is down slightly in most countries. The lowest shrink rates were recorded in Norway (.83 percent of retail sales), followed by Japan. The US came in at 1.48 percent of retail sales, down slightly from 1.50 percent. The highest rates were recorded in Mexico (1.70 percent) and China (1.53 percent). The overall reduction in shrink was attributed to an increased focus on loss prevention methods and a slightly improved economic outlook, particularly in North America.  In addition, there was increased loss prevention spending in countries with the best shrink improvements.

While shoplifting is the biggest cause of all retail shrink in 16 of the 24 countries surveyed, in the US, employee theft ranked first at 42.9 percent, with shoplifting next at 37.4 percent.

Cost of Retail Crime Up

Even as the US shrink rate lowered slightly, the cost of retail crime (supplier fraud, employee theft, shoplifting, loss prevention spend) as a percentage of revenue, rose 27 percent, to 1.74 percent last year (from 1.37 percent in 2012). That increase is primarily attributed to a surge in shoplifting and dishonest employee theft incidences in the country, along with lower loss prevention spending by US retailers.

US discounters (2.78 percent), pharmacies/drugstores (2.16 percent) and supermarkets/grocery retailers (1.38 percent) witnessed the highest shrink rates because of the widespread prevalence of organized retail crime and lower loss prevention spending for some of them. Almost all types of retail stores in the US were affected by dishonest employee theft and shoplifting.

Most Stolen Merchandise

Shoplifters and dishonest employees in the US primarily targeted products that were easy to conceal and resell in the market, including fashion and mobile phone accessories. Other frequently pilfered products include power tools, wines and make-up products.

The use of source tagging RF labels prior to arriving at retailers has increased globally and continues to build momentum according to respondents, while 50 percent of US retailers plan to increase or maintain the number of source tagged SKUs.

According to The Smart Cube, “This report provides detailed descriptions of the sources of shrink and helps retailers understand the most cost-effective ways of addressing their problems. A number of best practices emerged from our research, including appropriate spending ranges to address the issue.”

“We are pleased to support this global statistical research for the thirteenth year,” said Per Levin, president and chief sales officer Shrink Management & Merchandise Visibility Solutions, Checkpoint Systems. “Our hope is that retailers can learn more about the causes of shrink and work with their suppliers and solutions partners to create joint programs to reduce shrink and associated costs.”

Interested parties can obtain a copy of the latest Global Retail Theft Barometer report and see a video overview of the study at GlobalRetailTheftBarometer.com. In addition, an in-depth review of the study will be available via a webinar hosted by Loss Prevention Magazine today at 11 a.m. EST.

Retailers wishing to participate in next year’s Global Retail Theft Barometer study may register here.

Featured

  • Video Surveillance Trends to Watch

    With more organizations adding newer capabilities to their surveillance systems, it’s always important to remember the “basics” of system configuration and deployment, as well as the topline benefits of continually emerging technologies like AI and the cloud. Read Now

  • New Report Reveals Top Trends Transforming Access Controller Technology

    Mercury Security, a provider in access control hardware and open platform solutions, has published its Trends in Access Controllers Report, based on a survey of over 450 security professionals across North America and Europe. The findings highlight the controller’s vital role in a physical access control system (PACS), where the device not only enforces access policies but also connects with readers to verify user credentials—ranging from ID badges to biometrics and mobile identities. With 72% of respondents identifying the controller as a critical or important factor in PACS design, the report underscores how the choice of controller platform has become a strategic decision for today’s security leaders. Read Now

  • Overwhelming Majority of CISOs Anticipate Surge in Cyber Attacks Over the Next Three Years

    An overwhelming 98% of chief information security officers (CISOs) expect a surge in cyber attacks over the next three years as organizations face an increasingly complex and artificial intelligence (AI)-driven digital threat landscape. This is according to new research conducted among 300 CISOs, chief information officers (CIOs), and senior IT professionals by CSC1, the leading provider of enterprise-class domain and domain name system (DNS) security. Read Now

  • ASIS International Introduces New ANSI-Approved Investigations Standard

    • Guard Services
  • Cloud Security Alliance Brings AI-Assisted Auditing to Cloud Computing

    The Cloud Security Alliance (CSA), the world’s leading organization dedicated to defining standards, certifications, and best practices to help ensure a secure cloud computing environment, today introduced an innovative addition to its suite of Security, Trust, Assurance and Risk (STAR) Registry assessments with the launch of Valid-AI-ted, an AI-powered, automated validation system. The new tool provides an automated quality check of assurance information of STAR Level 1 self-assessments using state-of-the-art LLM technology. Read Now

New Products

  • Camden CM-221 Series Switches

    Camden CM-221 Series Switches

    Camden Door Controls is pleased to announce that, in response to soaring customer demand, it has expanded its range of ValueWave™ no-touch switches to include a narrow (slimline) version with manual override. This override button is designed to provide additional assurance that the request to exit switch will open a door, even if the no-touch sensor fails to operate. This new slimline switch also features a heavy gauge stainless steel faceplate, a red/green illuminated light ring, and is IP65 rated, making it ideal for indoor or outdoor use as part of an automatic door or access control system. ValueWave™ no-touch switches are designed for easy installation and trouble-free service in high traffic applications. In addition to this narrow version, the CM-221 & CM-222 Series switches are available in a range of other models with single and double gang heavy-gauge stainless steel faceplates and include illuminated light rings.

  • QCS7230 System-on-Chip (SoC)

    QCS7230 System-on-Chip (SoC)

    The latest Qualcomm® Vision Intelligence Platform offers next-generation smart camera IoT solutions to improve safety and security across enterprises, cities and spaces. The Vision Intelligence Platform was expanded in March 2022 with the introduction of the QCS7230 System-on-Chip (SoC), which delivers superior artificial intelligence (AI) inferencing at the edge.

  • EasyGate SPT and SPD

    EasyGate SPT SPD

    Security solutions do not have to be ordinary, let alone unattractive. Having renewed their best-selling speed gates, Cominfo has once again demonstrated their Art of Security philosophy in practice — and confirmed their position as an industry-leading manufacturers of premium speed gates and turnstiles.