Retailers losing billions to inventory shrink
The nation's retailers lost a staggering amount of money in 2016 due to shoplifting, organized crime, internal theft and other types of inventory shrink.
Inventory shrink totaled $48.9 billion in 2016, up from $45.2 billion the year before, as budget constraints left retail security budgets flat or declining, according to the annual National Retail Security Survey by the National Retail Federation and the University of Florida. The thefts amounted to 1.44% of sales, up from 1.38%.
According to the study, which was sponsored by The Retail Equation, 48.8% of retailers surveyed reported increases in inventory shrink, and 16.7% said it remained flat. Shoplifting and organized retail crime accounted for 36.5% of shrink, followed by employee theft/internal (30%), administrative paperwork error (21.3%) and vendor fraud or error (5.4%).
Shoplifting continued to account for the greatest losses of overall shrink. Shoplifting averaged $798.48 per incident, up from $377 in 2015. The rise was partially attributed to retailers allocating smaller budgets for loss prevention, leaving them with fewer security staff to fight theft, the report said.
The average loss due to employee theft per incident was put at $1,922.80, up from $1,233.77 in 2015. The average cost of retail robberies dropped to $5,309.72 from $8,170.17 in 2015, but remained at more than double the $2,464.50 seen in 2014.
For the first time in the survey, retailers were asked about return fraud, reporting an average loss of $1,766.27.
“Retailers are proactive in combatting criminal activity in their stores but acknowledge that they still have a lot of work left to do,” said NRF VP of loss prevention Bob Moraca. “The job is made much more difficult when loss prevention experts can’t get the money they need to beef up their staffs and resources. Retail executives need to realize that money spent on preventing losses is money that improves the bottom line.”
Computer meltdown takes a toll on U.K. grocer’s home delivery service
A computer glitch is blamed for canceled orders and growing frustrations among Tesco’s home delivery customers on Tuesday.
An IT meltdown impacted orders filtering into the U.K.-based supermarket giant’s online grocery shopping system. The glitch impacted orders being placed online, as well as those scheduled for delivery, according to customer posts on Twitter.
Britain’s biggest supermarket said up to 10% of orders had been affected. The issue impacted customers nationwide, according to The Guardian.
Tesco used Twitter to address shopper concerns. "We cancelled a high volume of orders today due to an IT issue, so this has had a knock on effect. Sorry for the inconvenience,” the grocer said in one tweet.
Tesco continued to field questions and complaints on social media well into Wednesday, responding directly to individual Twitter posts. Customers were also offered a 10 pound ($12.66) voucher as compensation, and were asked to re-arrange their deliveries online, according to the BBC.
While the grocer continued to resolve affected orders on Wednesday, some customers remained caught in the aftermath. “Due to a high volume of cancellations all of our slots [Tuesday] were taken. I'm really sorry for the inconvenience,” according to one of Tesco’s Twitter posts.
Walmart to suppliers: Get off Amazon cloud
Walmart is asking its technology suppliers to pick sides in its retailing war with Amazon.
The retailing giant reportedly warned some tech companies that if they want its business, they can't run applications on Amazon’s cloud platform, Amazon Web Services. Walmart currently partners with tech suppliers that already leverage cloud apps running on AWS, although the retailer didn’t reveal which applications or how many they use, sources told the Wall Street Journal.
Walmart spokesman Dan Toporek told CNBC, “Our vendors have the choice of using any cloud provider that meets their needs and their customers' needs. It shouldn't be a big surprise that there are cases in which we'd prefer our most sensitive data isn't sitting on a competitor's platform.”
In 2016, AWS posted $3.1 billion in operating income for 2016. This was almost $1 billion more than the company’s North American retail sales, according to Amazon’s fourth quarter results for the period ended Dec. 31, 2016.
Walmart’s decision is the latest shot in the ongoing battle between the two retailing giants. It also could be a response to Amazon's two latest announcements.
In addition to revealing that it would purchase Whole Foods Markets for $13.7 billion, Amazon recently invited individuals participating in government assistance programs to sign up for an Amazon Prime membership at the discounted rate of $5.99 per month. This program specifically targets an audience segment that has long been a stronghold of Walmart: lower income customers.
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