Shrinkage levels average 1.27% of sales, which translates to a $57 billion loss to the industry, according to the U.S. Retail Fraud Survey, which is based on research into the systems and strategies used by 100 leading North American retailers.
The biggest area of store loss remains employee theft (38% of shrink), up 3% from last year, according to the study, published by U.K. based Retail Knowledge and sponsored by Volumatic and Kount. It is followed by cash theft (24%), up 20% from last year, administration and book keeping errors (21%), down 9%, and shoplifting (11%), down 15%.
The biggest area of online loss is fraudulent use of credit cards (59% of shrink).
In other survey highlights:
• Return fraud is costing retailers an average of 0.25% of sales this year, compared with an average of 0.4% last year.
• With regards to loss prevention departments, on average, each member of the fraud prevention team is responsible for $103 million of sales.
• Guards are used by 31% of all retailers, but never in all of their stores. The highest use of guards (9%) is used in less than 5% of stores and 45% of retailers do not use them in any of their stores.
• Most retailers manage store and online loss prevention separately.
• Retailers’investment in store-based and online fraud prevention is beginning to even up. Store fraud prevention spend has fallen from 0.6% of sales last year to 0.5% this year; online fraud prevention spend has increased from 0.2% of sales last year to 0.34% this year.
• Shrinkage rates vary by retail sector, with discount stores on the high end, at 2.5% of sales, and specialty retailers on the low end, at 0.7% of sales.