U.S. retailers are losing billions of dollars a year to “inventory shrink”–losses caused by shoplifting, employee or vendor theft, and administrative errors, according to a new study from the National Retail Federation.
Inventory shrink averaged 1.38 percent of retail sales, or $44 billion, according to the report, which was released during the NRF Protect Conference and Expo–an event focused on retail loss prevention.
Shoplifting makes up the biggest part of inventory shrink at 38 percent, followed by employee theft (34.5 percent) administrative errors (16.5 percent), vendor fraud or error (6.8 percent) and unknown losses (6.1 percent).
“A common misperception about shoplifting is that retailers can ‘afford’ the loss of a candy bar or a pair of jeans, but the truth is that the industry loses billions of dollars each year at the hands of callous criminals that could be put towards human capital, promotions and other necessary business operations,” said Bob Moraca, NRF Vice President of Loss Prevention. “Though we are encouraged by the partnerships forged with law enforcement over the years and advances in technology that will help deter a crime before it happens, criminals continue to thwart much of the progress retailers have made thus far.”
About four in 10 retailers said their loss prevention budgets increased from 2014 to 2015. About a third said loss prevention budgets would remain about the same. But almost one in four (23.9 percent) said their loss-prevention budgets were cut from the prior year.