"Retail Shrinkage" Rises to $119 Billion in 2011, Up 6.6%

As if brick and mortar retailers don't have enough to worry about right now, they also have to contend with an increasing "retail shrinkage" number.

"Retail shrinkage" occurs when retailers lose inventory. This can include losing inventory due to shoplifting, employee theft, supplier fraud and other reasons.

"Retail shrinkage" is a big, big problem for retailers. How big? In 2011 alone, retailers lost $119 billion to "retail shrinkage", up 6.6% from the year before. That's a big jump that comes at a time when retailers are already feeling the pinch thanks to a high national unemployment rate and increasingly savvy/thrifty shoppers.

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According to the Centre for Retail Research (link below), the two biggest contributors to "retail shrinkage" are shoplifters and employee theft.

In 2011, shoplifters made off with an estimated $51.457 billion in retailer inventory. This accounts for over 43% of the total global "retail shrinkage" number.

Employee theft resulted in $41.65 billion worth of inventory disappearing last year, while suppliers/vendors ($6.629 billion) and internal errors (mispricing, invoicing errors, etc) contributed as well.

According to the report that I linked to below, retailers spent $128 billion on crime-plus-loss prevention in 2011. This includes the hiring of security guards and implementation of other measures to prevent theft, both from employees and shoplifters.

Source: Centre for Retail Research - The Global Retail Theft Barometer 2011

Filed under: General Knowledge