Types of Retail Theft and How to Prevent Them
Retailers facing a mix of increasing inventory theft and declining enforcement actions are coming to rely more on retail theft prevention devices to stem their losses.
U.S. retailers experience an average shrink rate of 1.44 percent, which cost the economy $48.9 billion in 2016, according to the National Retail Federation’s National Retail Security Survey for 2017. Furthermore, about one-fourth of retailers have inventory shrinkage rates of 2 percent or more and the average cost per shoplifting incident has doubled to $798.48.
Just how big is the problem? One in 11 people in the U.S. is a shoplifter, and more than 10 million people have been apprehended for shoplifting over the past five years, according to the National Association for Shoplifting Prevention. Yet punitive actions against both shoplifters and dishonest employees have dropped significantly, the NRF says.
With theft losses on the rise, retailers experience inventory shrinkage in three major categories, according to the NRF survey:
- Operational error: damage from handling, spillage and vendor errors (such as delivery shortages) account for about 21 percent of losses.
- Internal theft: employee theft accounts for about 30 percent of losses. Employee integrity screening during hiring has helped reduce this segment.
- External theft: shoplifting is the most significant source of loss at nearly 37 percent, including theft by organized retail crime gangs.
As losses from theft increase, retailers are at the same time reducing their loss prevention staffing, according to the NRF survey. That’s where advances in monitoring and surveillance technology are helping retailers take control of the situation.