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Retail Inventory Shrinkage Reached $45.2B in 2015

Loss prevention remains a prominent issue among retail industry members.

The National Retail Federation (NRF) in collaboration with the University of Florida, announced its 2016 National Retail Security Survey results, which showed that retailers’ inventory shrink averaged 13.8% ($42.5 billion)in 2015—a $1.2 billion increase from the previous year.

“[Loss prevention] professionals have been working diligently to find advancements in technology aimed at deterring crime in our industry, sometimes even before it happens—but as our techniques get more sophisticated, so too do the criminals,” Bob Moraca, NRF’s vice president of loss prevention, said.

Out of the 80 senior retail loss prevention executives surveyed, 47 percent reported increases in overall inventory shrink last year.

Shoplifting was the greatest cause of inventory shrink in 2015. Companies reported an average loss of $377 per incident (39 percent), which was up about $60 from 2014. Robberies also remain a problem for retailers that want to reduce inventory shrink. The average cost of robberies for each retailer was reported to be $8,180.17—a significant increase from 2014’s number ($2,465). The report also showed that dishonest employee cases were not to blame so much for 2015’s retail inventory shrinkage. The average loss from dishonest employee cases was only $1,233.77 compared to $1,546.83 in 2014.

The survey also showed that retailers’ loss prevention sector budgets remained flat year-over-year. Although this was the case, the amount of loss prevention personnel per $1 billion in sales increased to 37.5 percent in 2015, a 5 percent increase from 2014.

Dr. Richard Hollinger, a University of Florida criminology professor, said that although retailers benefit from loss prevention personnel, they still need to form partnerships with local law enforcement and foster future developments to combat high inventory shrink.

“Loss prevention professionals continue to do an exceptional job at locating the issues and finding solutions to prevent additional loss in their retail stores. It is important for retailers to continue building relationships with law enforcement and leverage new technologies that can further provide protection to their assets, customers and employees,” he said.