If you are responsible for managing retail shrinkage you probably have some ideas of what can be done to cut losses. Before taking action and investing dollars into a solution you may want to consider the known sources of retail loss and how that may change your decision to invest.
The University of Florida conducts an annual survey titled National Retail Security Survey which is regarded as the most thorough and accurate reference in the industry. The survey was introduced in 1991 and they survey 106 corporate retail chains in 25 different vertical markets for a truly comprehensive effort.
What have been very consistent over the years are the top sources of retail shrinkage. The biggest hit on the list every year is employee theft. Employee Theft can include everything from sweet-hearting, to time theft, to cash and merchandise shortages. Your employees have the most access to your assets and should never be over-looked when inventory is looking grim.
Shoplifting hits the list consistently at number two at about 36% of all retail shrinkage. Interestingly the per-incident value of shoplifting is on the rise sharply at an average of $549.90 but still much lower than that of employee theft averaging $2,672.95 which again is sharply on the rise. As the economy continues to take it’s hits people are more and more desperate to cling on to their life style and don’t necessarily have the means to pay for it. People steal for all sorts of reasons but when the economy is at its lowest points people become desperate and will do what it takes to get by, including shoplifting.
The third highest source of loss is Administrative and paperwork error and has remained fairly consistent at an average of around 15%. This has a fairly simple explanation, people are not perfect. These errors are not counting intentional fraud and theft by “fixing the books”. This is simply human error. You should urge your employees to always double check their work when it comes to administrative duties to cut this number down in your business.
Fourth and fifth places are a virtual tie between unknown and vendor fraud. Vendor fraud is often one that surprises retailers and they usually haven’t even considered the potential there. Retailers should always double check their shipments for accuracy. Many don’t consider the fact that items generally don’t just “fall off the truck”. Keeping a close eye on your inventory both when is first arrives and when it’s on your sales floor can mean a drastic difference in loss.
The most efficient way to plan your investment in controlling retail shrinkage is to consider consulting a Loss Prevention Investigator to assess your current situation and prioritize your opportunities for improvement.
Contact us at Loss Prevention Systems for a consultation today!