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Shoplifting, employee theft top reasons for $44B retail loss in 2014

Shoplifting is the key activity spurring retail loss and resulted in a fraud cost of $44 billion in 2014. The good news is the amount of loss is declining.

June 29, 2015

Shoplifting is the key activity spurring retail loss and resulted in a fraud cost of $44 billion in 2014, according to a new study. The good news is the amount of loss is declining.

The inventory shrink is 1.38 percent of retail sales on average, with shoplifting incidents accounting for 38 percent of the total loss. Other contributing factors include employee theft ( 34.5 percent), administration and paperwork errors (16.5 percent), vendor fraud or effort (6.8 percent) and unknown loss (6.1 percent), states an announcementon the findings of the latest National Retail Security Survey (NRSS).

The shrink percentage is the lowest yet in the survey’s 24-year history, states Dr. Richard Hollinger, criminology professor at the University of Florida and lead author of the NRSS study.

"Retail loss prevention professionals have one of the hardest jobs in the industry – protecting their customers, employees and merchandise from the threat of harm and fraud, and the results of this survey prove the enormity of their task," states National Retail Federation (NRF) President and CEO Matthew Shay, in the announcement.

In response retailers appear to be shoring up loss prevention budgets, with 39.4 percent of those polled indicating the 2015 budget allocation against loss and theft is increasing this year. About 23.9 percent surveyed are decreasing such resources and 36.6 percent are keeping loss allocation funding at the same level of 2014.

The National Retail Security Survey polled100 senior loss prevention executives from various sectors in retail in March and April 2015, and is a partnership between the University of Florida and the National Retail Federation.