While inventory shrink is still an issue in the retail industry, this year’s statistics indicate loss prevention efforts have been paying off.
The 2015 National Retail Security Survey showed a 1.38 percent average in inventory shrink (as a percent to sales) during the previous year, totaling $44 billion in losses, Security InfoWatch reported. While retailers are still losing a considerable amount, this year’s shrink percentage was the lowest ever recorded in the 24 years the survey has been taken.
Top Threats Contributing to Inventory Shrinkage
“This year’s shrink percentage was the lowest ever recorded in the 24 years the survey has been taken.”
An average of 1.38 percent inventory shrink is still a significant figure, which takes into account several different sources. According to this year’s survey, customer shoplifting accounted for 38 percent of shrinkage last year. In addition, 34.5 percent of losses came due to employee theft, and another 16.5 percent was the result of administrative and paperwork errors. The final 6.8 percent was due to vendor fraud.
These numbers illustrate the array of threats today’s retailers face, including professional thieves and internal theft. Dr. Richard Hollinger, lead author of the survey and criminology professor at the University of Florida, noted that this year’s results showed a significant change. Previous surveys attributed a larger percentage of inventory shrinkage to employee theft.
“For years, I have been criticized by some retailers who didn’t believe that internal theft was bigger than the shoplifting numbers and that’s been the case for the over 20 years we’ve done this study,” Hollinger said. “This year, for the first time, that number flipped so that a larger portion of the loss was attributed to shoplifting and organized retail crime as opposed to internal theft.”
Hollinger pointed out that not only is this a reflection of the increasing activities of shoplifters, but could also show that retailers are now more effectively deploying internal theft prevention strategies. Video surveillance and other security solutions have also helped curb losses.
Further Prevention of Retail Shrink
While this year’s survey showed an overall reduction in inventory shrink, this doesn’t mean retailers should cease efforts when it comes to product security. In fact, as outlined in our infographic below, the industry is avoiding complacency by placing a higher priority on loss prevention, with 40 percent of all retailers increasing their loss prevention budgets.
So what solutions and best practices can retailers utilize in the continuing fight against retail shrink?
- Deploy video surveillance: Hollinger pointed out that video surveillance and connected analytics software have been of considerable aid in reducing theft and loss.
- Improve merchandise security: Solutions including intelligent EAS systems can help boost the protection of individual items, helping to ensure that merchandise doesn’t leave the store until after a transaction has been completed.
- Leverage advanced tracking: RFID solutions including tags, doorway readers and handheld readers provide an unmatched level of visibility into operations and inventory, unparalleled process management and compliance monitoring, and reinvents how retailers discover and resolve shrink beyond the capabilities of traditional EAS.
However, this only scratches the surface of the inventory visibility, security and intelligent packaging solutions available. To find out more and establish a unique loss prevention and product security strategy for your store, contact CONTROLTEK today.
About CONTROLTEK
Since 1976, we have been delivering unique products and solutions to the cash-transfer and asset protection industries to address specific business challenges. Our company has grown steadily based on the quality of our products and the quality of our service. Our commitment to research and development is combined with a willingness to listen to the people who everyday depend on our products. By relentlessly researching and introducing new materials and new features, we are proud to say we have impacted the way assets are secured globally.
With experience gained through research and collaboration within the financial and retail sectors, we actively charted a course over the past several years to bring added value, new thinking and viable approaches, addressing the dilemmas and challenges that frustrate business professionals today.
During this process, we realigned our resources within CONTROLTEK, creating three silos (ISS, ISP and IVS). This enables us to focus more specifically on the needs of our Clients and their specific challenges they face on a daily basis. Additionally, CONTROLTEK has aligned itself with Global partners to provide holistic solutions that solve today’s challenges. Whatever the application, CONTROLTEK resources stand by ready to deliver results that enable commerce and effectively secure assets at financial institutions and leading retailers across the globe.