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Retail theft hits record levels

Overall shrinkage - employee theft, shoplifting, vendor fraud and administrative error - cost US retailers more than $31 billion last year, according to the latest National Retail Security Survey (NRSS) report on retail theft. The survey analysed theft incidents from 118 of the largest US retail chains. Sensormatic, a business unit of Tyco Fire & Security, is the principal sponsor of the survey.

According to criminologist Richard C. Hollinger, Ph.D., who directed the University of Florida survey, retailers lost 1,7% of their total annual sales to inventory shrinkage last year, making it the single largest category of larceny in the US - larger than motor vehicle theft, bank robbery and household burglary combined.

"For the second year in a row, employee theft hit record levels, with retail security managers attributing more than 48,5% of their losses this year to theft by disgruntled workers," Hollinger said. "Translated into dollars, employee theft cost retailers a record $15 billion. Losses from employees cost each US family of four an extra $440 a year in higher prices."

The second most reported source of inventory shortage was shoplifting. Retail chains that reported estimates of shoplifting above the average included household furnishings, drugs, recorded music/videos, apparel, and department stores. Contributing factors of shoplifting may be determined by unemployment, retail prices, and the overall economy. Due to the weak economy, some experts predict that the current climate could increase shrinkage from shoplifting by almost $2 billion in the next NRSS.

Juveniles account for nearly half of all shoplifters. Other offenders include vagrants, impulse shoplifters, drug addicts, kleptomaniacs, and professional thieves. Following are some of the security technologies being used by retailers to help control losses due to shoplifters:

* Point-of-sale data-mining software solutions that help detect potential theft problems at the cash register and alert appropriate personnel in realtime. These data-mining packages can be tied to digital video recorders (DVRs) to provide clear images of who sold what to whom with a click of a button and delivered to any location around the world.

* Source-tagging programs where small anti-theft labels about the size of a paper clip are placed inside an actual product or product package, effectively hiding the tag from view.

* Self-alarming anti-theft tags that can broadcast an audible alarm throughout the store when a shoplifter attempts to improperly remove it from merchandise.

Making retail business more secure takes effort, but it is worth the investment, since prevention is more cost-effective than loss of revenue due to shrinkage. If companies continue to sustain significant annual losses, shrinkage will continue to dramatically impact earnings, profitability and growth. In the end, it will be loyal consumers who pay the price in the form of higher retail prices.

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