Retailers Lose Billions to Theft, Fraud and Human Error

Published on: January 12, 2019 / Updated on: January 12, 2019 – Author: Konrad Wolfenstein

Being a brick-and-mortar retailer these days isn't easy. Aside from the obvious problem of competing with thousands of online retailers, they also have to contend with shoplifters, dishonest employees, and organized crime. According to a report by the National Retail Federation, US retailers lose an average of 1.33 percent of their sales to inventory shrinkage—that is, losses due to theft, shoplifting, error, or fraud. This cost the US retail industry a total of $46.8 billion in 2017.

Following a survey of 63 retailers in spring 2018, the NRF found that shoplifting (including organized retail crime) was the largest source of inventory losses in 2017, accounting for an average of 35.7 percent of shrinkage. Internal theft by employees and other means was a close second, which is why most retailers take steps to ensure the integrity of potential employees, such as criminal conviction checks, employment history reviews, personal references, and drug screening.

Being a brick-and-mortar retailer isn't easy these days. Aside from the obvious problem of having to compete with thousands of online retailers, you also must deal with shoplifters, dishonest employees and organized criminals taking a bite out of your bottom line. According to a report by the National Retail Federation , US retailers lose 1.33 percent of sales on average to inventory shrink, ie a loss of inventory related to theft, shoplifting, error or fraud, costing the US retail economy a total of $46.8 billion in 2017.

Having surveyed 63 retailers in the spring of 2018, the NRF found that shoplifting by external actors (including organized retail crime) was the biggest source of inventory loss in 2017, accounting for 35.7 percent of shrinkage on average. Internal theft by employees and others was close behind however, which is why most retailers take measures to ensure the integrity of potential employees, such as criminal conviction checks, verification of employment history, personal references and drug screenings.

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