Omnichannel

Theft top factor in retail shrink

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October 29, 2026

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External theft, including involvement of organized retail crime, is the top single source of loss, accounting for 25% of retail shrink.

That's a top finding from an IHL Group and Sensormatic Solutions joint study that also revealed how complicated retail shrink really is and why leaders need to begin redefining loss within their operations, according to a press release.

The " Beyond Shrink: 2026 Global Total Retail Loss Study" found that while external theft remains the largest individual source of loss (25%), the bulk of losses (75%) originates in other areas of the retail business.

The study examined five key areas of the business where retailers experience loss — store theft, supply chain, returns/reverse logistics, e-commerce fulfillment and administration.

"Investments in digital data collection and analytics systems have fundamentally changed retailers' understanding of loss within their stores and supply chains," Greg Buzek, founder and president of IHL Group, said in the release.

"The impact of external theft and shoplifting, including organized retail crime, is real, and it is rising globally — but it's not where the majority of loss dollars actually go. The report identifies and quantifies this gap with new clarity, laying bare how outdated benchmarks and measures turn into tunnel vision, gaps in deterrents and lost opportunities."

Retailers report administrative process errors cost an average of $103.40 per incident, nearly matching the $107.00 average cost of employee theft.

Return fraud increased for 68% of retailers, nearly matching the 69% reporting increased shoplifting in their retail locations. Even so, retailers rank fraud prevention fifth among seven when prioritizing loss-related performance measures.

"For years, the industry has understandably focused on the most visible forms of retail loss, but what's readily visible doesn't always provide a full picture," Tony D'Onofrio, president of Sensormatic Solutions, said in the release. "This research shows that loss is moving across the enterprise into supply chains, returns, digital commerce and operational processes. The opportunity now is to use data, technology and a broader view of the business to understand where losses really occur, respond accordingly, and make retail better."