ORLANDO, Fla.--With talk of the growing risk of organized retail crime, active shooters and data breaches getting prime spotlight at this year's National Retail Federation's Loss Prevention Conference & Exhibition, the news that inventory shrinkage as a percentage of sales fell to its lowest level in 17 years in 2007 was warmly welcomed.
The shrink rate of 1.424 percent represents a 9.3-percent decline from the 2006 results of the National Retail Security Survey, said Dr. Richard Hollinger, professor of criminology, law and society at the University of Florida and author of the report. This figure marked a six-year downward trend and is also the lowest rate in the history of the NRSS.
STORY CONTINUES BELOW
Advertisement
"I think you all need to be applauded even though there are many more problems on the horizon," Hollinger said to retailers in attendance at last Tuesday's morning session.
The jewelry sector reported a 0.178 shrink rate, the lowest level of all sectors, followed by consumer electronics and office supplies. Books and magazines (3.3 percent), auto parts and cards (3 percent) gifts and novelties (2.25 percent) recorded the highest shrink percentages.
Total losses -- $34.38 billion -- were also down approximately 15 percent, while LP budgets as a percentage of sales reached a seven-year high of 0.62 percent.
Lee Pernice, director of vertical marketing for ADT Security Services, which sponsors the survey, said the results show that "retailers recognize in hard economic times every dollar they can save from loss has a bigger impact on the bottom line."
But it also illustrates the effect that technologies such as video surveillance, exception-based reporting and EAS systems are having in the retail environment. Pernice said the technology that ADT and other vendors provide is helping retailers get a foothold on reducing losses.
"Today, a company's shrinkage rate could mean the difference between losses and profits," she said. "Using technology is the best way to reduce shrinkage is what we are finding."
Information in the 2007 survey was collected from 124 retailers.
