Retail Shrink Creeping Up According to Preliminary Results of National Retail Security Survey

• By Brent Dirks
• Jun 15, 2011

After recording an all-time low shrinkage percentage in 2009, retail crime and fraud is on the upswing.

Richard Hollinger, professor in the Department of Criminology, Law and Society at the University of Florida, presented the preliminary results of the 2010 National Retail Security Survey Tuesday at the National Retail Federation Loss Prevention Conference in Grapevine, Texas.

In 2009, shrinkage was 1.44 percent of all retail sales. The 2010 number rose to 1.56 percent. That may not seem like a large gain, but in the massive retail industry, that translates to $37.1 billion lost last year compared to $33.5 billion in the previous year.

“That number, $37.1 billion, is just a staggering amount of money,” Hollinger, the survey's author, said.

In further breaking down the study, two of the usual suspects headed the list once again in 2010 -- employee theft and shoplifting/organized retail crime.

Employee theft accounted for 43.7 percent ($16.2 billion) of shrink while shoplifting/organized retail crime was second with 32.6 percent ($12.1 billion.) Other loss factors included administrative error, vendor fraud and “unknown.”

Hollinger said the “unknown” reason for shrink has increased in the last few years.

In further breaking down the study, supermarket and grocery stores were especially susceptible to shrink, with an above-average 3.1 percent rate. Hollinger did say some of the issue with the high number could be spoliage, which some do count as shrinkage.

Another interesting vertical  was drug and pharmacy stores, whose shrink doubled in 2010. Hollinger speculated the large increase could be because of the theft of prescription drugs like Oxycontin.

Integrity screening, including drug testing and criminal conviction checks, are garnering interest from retailers to help combat shrink, according to the survey.

In technology, retail organizations are looking to spend money on POS exception-based technology tied to camera systems and remote IP video monitoring. Video analytics also made the list of technology retailers are looking into deploying for the first time.

The survey is conducted with a funding grant from ADT.