Retail Shrink Tops $50 Billion as Cyber Threats
Become More of a Priority
WASHINGTON, June 6, 2019 –
Theft, fraud and losses from other retail “shrink” totaled $50.6 billion in
2018, up from $46.8 billion the year before as industry security executives said
there is a growing overlap between loss prevention and cybersecurity efforts,
according to the annual National Retail Security Survey released today by the National Retail
Federation and the University of Florida.
“We are seeing dramatic changes in
the risks faced by retailers, and loss prevention practices and priorities are
evolving to meet those challenges,” NRF Vice President for Loss Prevention Bob
Moraca said. “As criminals find new ways to steal, loss prevention teams are
finding new ways to stop them. Increasingly, this is a battle focused on
technology.”
According to the report, shrink
averaged 1.38 percent of sales during 2018, up slightly from 1.33 percent in
2017, but has held steady around 1.4 percent over the past few years. With the
percentage largely unchanged, the increase in the dollar amount is due
primarily to growth in retail sales.
The largest losses per incident
came from robberies at an average $2,885.15 (down from $4,237.02 in 2017),
followed by employee theft at $1,264.10 (up from $1,203.16), and
shoplifting/organized retail crime at $546.67 (up from $543.28). Robberies are
comparatively rare, however, while shoplifting/ORC and employee theft together
typically account for about two-thirds of shrink each year, with most of the
remainder coming from vendor or paperwork errors.
While 43 percent of those surveyed
said the largest increase in fraud is occurring in stores, 30 percent said it
is happening online and 22 percent said it is coming in multichannel sales,
such as those where the purchase is made online but the merchandise is picked
up in store.
Of challenges that have grown in
priority for LP teams over the past five years, cyber-related incidents are the
top issue, according to 68 percent of those surveyed while 65 percent also
pointed to ecommerce crimes and another 51 percent cited return fraud,
including incidents involving purchases made online but picked up in stores.
ORC was cited by 65 percent, and internal theft by 60 percent.
A total of 89 percent said there
is increasing overlap between retail loss prevention teams and cybersecurity
teams, but only 30 percent of LP executives said they were regularly involved
in cybersecurity issues. Most of the time, LP is brought in after the fact on
cyber issues, with 60 percent saying they are called in for incident response
with only 26 percent involved in threat analysis.
LP executives are preparing for
increased involvement in cyber issues, with 62 percent seeking analytical
skills in new hires and 40 percent seeking cybersecurity skills.
“These are changing times in
retail and that means changes in loss prevention,” said University of Florida
criminology professor Richard Hollinger. “As always, the challenge is for the honest
to stay ahead of the dishonest.”
The survey of 63 loss prevention
and asset protection executives from a variety of retail sectors was conducted
February 27 through March 29. The study, which is a partnership between
Hollinger and NRF and is sponsored by Appriss Retail, was released as loss
prevention executives from across the country prepare to meet in Anaheim,
Calif., next week for the annual NRF PROTECT conference.
About NRF
The National Retail Federation,
the world’s largest retail trade association, passionately advocates for the
people, brands, policies and ideas that help retail thrive. From its
headquarters in Washington, D.C., NRF empowers the industry that powers the
economy. Retail is the nation’s largest private-sector employer, contributing
$2.6 trillion to annual GDP and supporting one in four U.S. jobs — 42 million
working Americans. For over a century, NRF has been a voice for every retailer
and every retail job, educating, inspiring and communicating the powerful
impact retail has on local communities and global economies.
