According to the results of the annual National Retail Security Survey released on Tuesday, retail shrink totaled $61.7 billion in 2019, a significant increase from the $50.6 billion reported the year before.
The survey, which was conducted by the National Retail Federation (NRF) and included responses from 69 loss prevention and asset protection executives from across a variety of retail sectors, found that shrink averaged 1.62% of sales during 2019, a new all-time high in the survey’s history. Prior to 2019, shrink levels had remained relatively flat, hovering around 1.4% over the past several years. Roughly seven in 10 retailers reported a shrink rate of 1% or higher last year, compared with just slightly more than half in 2018, and almost twice as many reported shrink rates of 3% or higher.
“Between an increase in incidents and new ways to steal, shrink is at an all-time high,” NRF Vice President for Research Development and Industry Analysis Mark Mathews said in a statement. “Loss prevention experts are facing unprecedented challenges from individual shoplifters to organized gangs to highly skilled cybercriminals. Retailers are responding with both traditional methods and the latest technology, but this is an ongoing challenge that can only be won with the support of lawmakers and law enforcement.”
Of challenges that have grown in priority for loss prevention teams over the past five years, 61% cited organized retail crime (ORC), 59% ecommerce and cybercrimes, 58% internal theft and 54% return fraud. In addition, 49% of those polled reported that 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.
As it relates to internal theft, the number of apprehensions for employee-related shrink saw in increase in 2019 as retailers reported an average of 560 apprehensions, up from 322.6 the year prior. However, the average dollar loss per dishonest employee decreased slightly in 2019 to $1,139.32, down from $1,264.10 the year before.
Shoplifting apprehensions also increased last year to an average of 688.8, up from 509.4 in 2018. Despite the increase in apprehensions, the average dollar loss per shoplifting incident was cut in half in 2019 to an average of $270.06, down from $546.67 the previous year. In fact, 39.1% of retailers reported that they experienced average shoplifting losses of less than $125.
To combat shrink, retailers reported increased use of technology such as point-of-sale analytics, surveillance 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 loss prevention staff.
For more information or to download a full copy of the survey, click here.