(LOS ANGELES) – As retailers struggle with a pullback in consumer spending, the economy continues to present new challenges for companies’ bottom lines. Preliminary results of the latest National Retail Security Survey, released in June at the National Retail Federation’s (NRF) Loss Prevention Conference and EXPO, show that retail shrinkage averaged 1.52 percent of retail sales in 2008, up from 1.44 percent in 2007.
According to the survey, total retail losses increased last year to $36.5 billion, up from $34.8 billion in 2007. The survey is a collaborative effort between NRF and the University of Florida.
“The increase in shrink levels signifies that criminals have found a way to manipulate and corrupt the retail industry,” said Dr. Richard Hollinger, lead author of the report and professor of criminology at the University of Florida. “Many retailers are being forced to decrease their current expenditures because of the state of the economy and the cut back in consumer spending, which leaves new opportunities for thieves to take advantage of companies.”
According to the survey, the majority of retail shrinkage last year was due to employee theft, at $15.9 billion, which represented almost half of losses (44%). The survey found that 14 percent of those cases involved collusion with outsiders. Shoplifting accounted for $12.7 billion (35%) of losses. Other losses included administrative error ($5.4 billion and 15% of shrinkage) and vendor fraud ($1.4 billion and 4% of shrinkage).
“While the economy plays a role in the amount of shoplifting around the country, these crimes are mostly the case of greed instead of need,” said NRF senior asset protection advisor Joe LaRocca. “People aren’t stealing to feed their families; they’re stealing iPods, handbags, and other discretionary items. Retailers are not tolerant of this activity and are prosecuting those who are blatantly breaking the law.”
As retailers fight shoplifting and employee theft, they remain focused on losses from organized retail crime rings. According to NRF’s recent organized retail crime survey, 92 percent of retailers said they were victims of organized retail crime in the last year and nearly three-fourths (73%) say the problem is worsening. Additionally, the National Retail Security Survey found that nearly 21 percent of retailers have an organized retail crime task force dedicated to monitoring, tracking and apprehending criminal gangs.
The National Retail Security Survey is an annual survey of loss prevention executives that benchmarks retail shrinkage and operational information about how retailers are combating losses. The study, which surveyed 95 retailers in the first half of 2008 and uses data from 2007, is a partnership between the University of Florida and the National Retail Federation.
For more information please visit www.nrf.com.