'Clear progress' in fight against LP, researcher says
GAINESVILLE, Fla.—U.S. retail inventory shrinkage fell last year to 1.42 percent, the lowest recorded level in 20 years, but 2011’s $35.28 billion in lost profits is at a record high because of moderate growth in U.S. retail sales, according to a wide-ranging national survey examining loss prevention.
More than 100 corporations representing a majority of the top 100 U.S. retailers across 25 verticals responded to the 2011 National Retail Security Survey, produced by Richard Hollinger and Amanda Adams of the University of Florida’s Security Research Project.
The shrinkage rate decrease is “remarkably good news and demonstrates clear and consistent progress in the war on reducing retail losses in spite of the present economic slump and the threat of ORC,” criminologist Hollinger wrote in his final report, released last week. Hollinger, chairman of the UF Department of Sociology and Criminology & Law, also is connected to the National Retail Federation.
“In many stores and many chains, they have been very effective at controlling shrinkage, and a new norm has been set. In the ’90s, shrinkage rates were much higher,” Hollinger told Security Director News, topping out at 1.95 percent in 1994. Technology, including sophisticated electronic article surveillance tags, cameras and other devices, has helped to prevent and deter stealing, he said.
The economy has also played a role. “Jobs are harder to get and these people are fearful of losing those retail jobs,” he said. “When the economy went south everybody thought that shoplifting and employee theft would skyrocket,” but that didn’t happen.
Retailers reporting above-average shrinkage percentages were supermarket/grocery; craft/hobby; auto parts, tires and accessories; children’s apparel; optical; men’s and women’s apparel; and discount stores.
“This is largely due to the especially high desirability of merchandise sold in these particular chains, which makes theft much more attractive to organized retail gangs, amateur shoplifters and employees,” Hollinger wrote.
Interdisciplinary task forces have helped to combat organized retail gangs, he said. Police departments used to think ORC was a problem for retailers only, but lately have seen that “it feeds other forms of crime,” such as terrorism, methamphetamine production and general violence. Public-private networks in which retailers and law enforcement share information about cases, have helped, he said.
Lower than average shrink reports came from, among others, department stores, pharmacies, sporting good stores, jewelry stores and home products retailers.
Standalone stores and those in enclosed malls fared better with shrink last year—1.27 percent and 1.39 percent, respectively—than their counterparts in strip malls—1.55 percent.
Respondents attributed 44.2 percent of their inventory losses to employee theft and 35.8 percent to shoplifting, which remains on par with the previous year’s findings.
LP budgets last year were down as a percent of total sales, with 0.35 percent of sales earmarked for LP. Without funding for increased technology, more LP responsibilities are being shifted to overworked store managers and untrained personnel, Hollinger wrote.
Asset control programs remain the key to their LP programs, retailers said. POS exception reporting, refund controls, inter-store transfer controls, price change controls and exit door controls are the top techniques retailers plan to use to combat LP in the coming year. The “hottest” new LP technology is remote IP CCTV video, digital video recording, IP analytics and POS exception-based closed-circuit TV interfaced systems, the survey said.
“There is no one technology that is the silver bullet,” Hollinger said, but digital cameras, broadband capacity and software that allow remote monitoring in real time have been a boon for retailers.