Just when retailers thought they had loss prevention under control, a new wrinkle is adding concerns. For the first time in four years, the rate of retail loss has increased, according to the most recent National Retail Security Survey. The study, conducted by the University of Florida with a funding grant from ADT Security Services, is based on data shared by 146 of the largest retail chains in the United States.
Retail shrinkage, defined as a combination of employee theft, shoplifting, vendor fraud and administrative error, was 1.6% of total annual sales in 2005, up from 1.54% in 2004, according to the study, for an approximate loss of $37.4 billion.
While shoplifting is always a concern for retailers, chains are blaming organized retail theft (ORT) for the overall rise in incidents.
“ORT, or organized groups that steal merchandise from stores or warehouses, is a growing problem for retailers,” said University of Florida criminologist Richard Hollinger, Ph.D. (Hollinger has directed the National Retail Security Survey for the last 16 years.)
“The average loss per ORT incident is now more than $46,000,” he reported. “These crime rings work in small, organized groups and they can do a lot of damage in very little time. That’s what seems to be driving up the statistics.”
The largest source of loss continues to be employee theft, with the average loss per incident at $1,053. The good news is that this is a significant decline from 2003, when the average was $1,762.
In hopes of changing these trends, retailers are adding more solutions that limit an employee’s ability to walk away with merchandise, including cameras that monitor cash registers and storage areas.
They are also showing increased interest in technology to combat ORT, including video monitoring over the Internet and new intelligent camera systems that pick up unusual behaviors or patterns and can alert store employees to potential organized-crime activities.