Study: Global retail shrink up, ORC on the rise

Thursday, October 20, 2011

YARMOUTH, Maine—Global retail losses from shoplifting, employee fraud and organized retail crime increased 10.2 percent in the last year, to $119.1 billion, according to the Global Retail Theft Barometer 2011.

The report is based on survey responses from more than 1,000 retailers in 43 countries about their retail losses between June 2010 and June 2011.

Globally, customer theft, including shoplifting and organized retail crime, was the major contributor to retail shrinkage, costing retailers $51.5 billion in the 12 months ending June 2011, compared to $45.4 billion during the previous period.

In North America, retail shrink was estimated at $45.3 billion, or 1.58 percent of total retail sales, in the 12 months ending June 2011. The United States represented $41.7 billion of that total, with the rest reported by Canadian retailers.

In the United States and Canada, dishonest employees were the major culprit, responsible for $20 billion in losses, or 44.1 percent of the total. Shoplifting—including organized retail crime—was responsible for $16.2 billion in losses, or 35.8 percent of the total.

The average value stolen by dishonest employees was $1,750, compared to $372 for customer thieves, "emphasizing the shrink-reduction benefits of preventing employee theft," according to the survey.

But organized retail crime does appear to be on the rise. In North America, 58.4 percent of the 197 retailers that responded to the survey reported an increase in losses from organized retail crime.

North American retailers spent more than $13 billion on loss prevention, the largest portion—$7.4 billion, or 56.3 percent of the total–going towards LP personnel. Retailers appear to rely more heavily on contract employees than on fully employed LP personnel, spending $4.7 billion on the former and slightly less than $2.7 billion on the latter. The second largest cost–slightly less than $4.1 billion–went toward security equipment.

As for new policies to combat retail crime, 94 percent of North America retailers implemented more "employee training to help spot and deter theft," according to the survey. Forty-three percent of retailers said they have instituted new policies for "pre-hiring screening for new employees," while an additional 37 percent planned to do so.

The survey's results are similar to the latest National Retail Security Survey, released in June at the National Retail Federation’s Loss Prevention Conference, which reported total U.S. retail losses of $37.1 billion in 2010.