$42 billion of “shrink” in the United States represents 1.48% of sales Shrink, comprised of shoplifting, employee or supplier fraud and administrative errors, cost the global retail industry more than $128 billion last year, $42 billion in the United States alone, according to the latest Global Retail Theft Barometer study. On average, this loss represents 1.29% of retail sales worldwide.
The study, underwritten by an independent grant from Checkpoint Systems Inc., was conducted in 2014 by The Smart Cube and Ernie Deyle, a retail loss prevention analyst. It was based upon in-depth phone and written survey interviews conducted in 24 countries among 222 retailers representing $744 billion in sales in 2013.
According to the study, shrink is down slightly in most countries. The lowest shrink rates were recorded in Norway (.83% of retail sales), followed by Japan. The United States came in at 1.48% of retail sales, down slightly from 1.5% last year. The highest rates were recorded in Mexico (1.7%) and China (1.53%). The overall reduction in shrink was attributed to an increased focus on loss prevention methods and a slightly improved economic outlook, particularly in North America. In addition, there was increased loss prevention spending in countries with the best shrink improvements.
While shoplifting is the biggest cause of all retail shrink in 16 of the 24 countries surveyed, in the United States, employee theft ranked first at 42.9%, with shoplifting next at 37.4%.
According to the study, even as the U.S. shrink rate lowered slightly, the cost of retail crime (supplier fraud, employee theft, shoplifting, loss prevention spend) as a percentage of revenue, rose 27%, to 1.74% last year (from 1.37% in 2012). That increase is primarily attributed to a surge in shoplifting and dishonest employee theft incidences in the country, along with lower loss prevention spending by American retailers.
U.S. discounters (2.78%), pharmacies/drugstores (2.16%) and supermarkets/grocery retailers (1.38%) witnessed the highest shrink rates because of the widespread prevalence of organized retail crime and lower loss prevention spending for some of them. Almost all types of retail stores in the United States were affected by dishonest employee theft and shoplifting.