Regardless of the type of items you sell, Retail Shrinkage is a serious concern as it can hurt your bottom line. A recent report revealed that retail shrinkage had an estimated industry impact of about $50.6 billion in 2018. By comparison, this figure was $46.8 billion the previous year.

The Report

The report indicating this value of shrinkage comes from the National Retail Federation as well as the University of Florida. They released their National Retail Security Survey recently, which outlined the details. For several years, shrinkage was flat at about 1.4 percent of sales. The report shows that the reason for the increase in 2018 was sales growth of retail.

Causes of Shrinkage

According to the report, the incident that caused the highest loss per occurrence was robbery. After this came employee theft and then organized retail crime or shoplifting. Of the loss prevention executives that participated in the survey, 43 percent said the biggest fraud increase was in-store. Thirty percent indicated this happened online, and 22 percent saw the largest increase in multichannel sales.

The Role of Cybersecurity

It is no surprise that cyber-crime has increased the risk of shrinkage via fraud and other loss-prevention issues. Even so, most loss prevention professionals in the survey do not have involvement with cybersecurity issues. Just a quarter of them actively anticipate and analyze threats. The rest simply react to cyber-related breaches and theft.

That being said, loss prevention teams and strategies are evolving alongside the criminals. This is a tech battle where the loss prevention teams strive to stay ahead of cybercriminals, or at least at the same place.

Other Methods to Reduce Shrinkage

Retailers are increasing their use of security methods to reduce shrinkage via theft, including the installation of merchandise alarms, electronic and acoustomagnetic security tags, digital video recorders, and systems for check approval screening. At the same time, some methods have become less popular, including IP closed-circuit TV monitoring, IP analytics, and theft deterrent devices.

There has been a decline in actions against shoplifters and dishonest employees although these groups combined account for around two-thirds of shrinkage. In the report, experts indicate that this shift in methods is due to the increase in organized crime. Over 28 percent of those surveyed indicated an increase in the prioritization of large-scale theft in the past five years.

The bottom line is that retailers who worry about shrinkage are not alone, nor are those who experienced a slight increase in shrinkage from 2017 to 2018.

Source:

https://www.retaildive.com/news/retail-shrink-totaled-506b-in-2018/556551/

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