Sources of inventory shrinkage in retail

The University of Florida publishes an annual retail loss report that is considered to be the ultimate reference in the loss prevention industry.  They have identified five areas of inventory shrinkage/ losses which are: Administrative errors, Vendor Fraud, Unknown, Shoplifting and Employee theft.

Surprising to many at first is that employee theft is the primary source of retail loss.  Vendor fraud is mostly not even on a retailer’s radar but can account for 3 to 5 percent of annual losses.

Shoplifting is usually what comes to mind first when you mention retail loss.  This accounts for  around 35% of total retail shrinkage. 

One complication in calculating and categorizing these losses is that an unknown portion involves employees collaborating with shoppers and or outsiders.  This is called “sweet hearting”.  The employee running the cash register simply does not ring all items, or carries bar codes of inexpensive items and rings them instead of what is actually brought to the register. 

This bleeds into organized retail crime to a degree as well.  Organized retail crime is on the rise and is a serious threat especially to understaffed retailers.  A group or team will enter the store, one or more creates a distraction while others clean house.  The distraction can get very creative… everything from a scantily clothed female that strips to a false trip and fall. 

If you are suffering from retail loss and want help, contact Loss Prevention Systems today.