Jul 24, 2020
Buoyed by increased incidents and new ways to steal, theft, fraud and losses from other retail “shrink” rose to $61.7 billion in 2019, according to the National Retail Federation’s (NRF) annual “National Retail Security Survey.” The record haul by thieves was up a whopping 21.9 percent higher year-over-year.
According to the report, shrink averaged 1.62 percent of sales during 2019 after hovering around 1.4 percent over the past few years.
Among the emerging areas of concern as expressed by participants in the survey were:
- Increasing boldness on the part of shoplifters due to bail and criminal justice reforms;
- More attempted theft without fear of consequences;
- Gift card scams;
- Merch theft in fitting rooms;
- Self-checkout, mobile checkout;
- Heightened frequency of phone scams, including activation of gift cards;
- Opioid addiction, mental health challenges and economic conditions.
The number of shoplifting, organized retail crime and employee theft incidents all increased. Of challenges that have grown in priority for loss profession (LP) teams over the past five years, 61 percent cited organized retail crime, 59 percent e-commerce and cybercrimes, 58 percent internal theft and 54 percent return fraud.
One hurdle identified in the study was that rising incidents of theft have coincided with a period when states have amended laws to increase the dollar threshold that constitutes a felony, which is more likely to be prosecuted than a misdemeanor. With members of ORC gangs often making multiple small thefts and staying below the felony threshold to avoid prosecution, NRF has called for repeat offenses to be aggregated and counted toward felony thresholds to reflect the serious nature of organized theft.
The study also found a decreasing number of LP professionals actively involved with cybersecurity teams. Fewer than one in five LP professionals meets with cyber teams always or very often, down from three in 10 the previous year.
To fight losses, retailers reported increased use of technology, such as point-of-sale analytics, security cameras, wired alarms on high-value merchandise and online training for employees. Among tried-and-true methods making a comeback, new hire orientation and code of conduct were both up significantly, along with use of anonymous hotlines and bulletin board notices.
DISCUSSION QUESTIONS: Does it make sense that technology has so far been acting more as an enabler than an inhibitor of retail shrink? What tech and old-school solutions offer the most promise to counter rising shrink rates?
“Retailers should focus on increased surveillance deterrents, flexible payment options, truly make associates partners and not just employees, and community outreach.”