Retail losses hit 41.6 billion last year

As retailers continue to invest in new programs and technology to combat crime in their stores, dollar losses from theft and fraud have reached an all-time high. The preliminary results of the latest National Retail Security Survey were released at the National Retail Federation's Loss Prevention Conference. The survey found that retail shrinkage averaged 1.61% of retail sales last year, nearly unchanged from 1.60% in 2005.

Even though shrinkage as a percentage of sales stayed virtually the same, total retail losses increased last year to 41.6 billion due to higher retail sales in 2006 compared to 2005. According to the survey, the majority of retail shrinkage last year hit was due to employee theft, at 19.5 billion, which represented almost half of losses (47%). Shoplifting accounted for 13.3 billion, or about one-third (32%) of losses. Other losses included administrative error (5.8 billion and 14% of shrinkage) and vendor fraud (1.7 billion and 4% of shrinkage).
The survey suggests that the phenomenon of organized retail crime is gaining more awareness within the industry. As retailers' understanding regarding the impact of these crimes continues to grow, roughly half of companies say they are now tracking organized retail crime activity.

To combat criminals' brazen actions, retailers have been investing in new technologies to deter, detect and convict criminals. According to the survey, most retailers' loss prevention systems include burglar alarms (95.7%), visible closed circuit televisions (87.1%) and digital video (84.9%). Retailers also conduct check screening (60.4%), use armored cars (69.8%), and operate point of sale data mining software (69.1%), and hidden closed circuit televisions (57.6%)

Product categories that experienced the highest degrees of shrinkage include cards, gifts and novelties; specialty accessories; crafts and hobbies; and supermarket and grocery items.

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