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Latest Retail Shrink Data / Why Do People Steal? / New Technologies

In 2012-2013, global retailers shrink mental trianglelost $112 billion to shrink or 1.4% of retail sales on average. The top 5 countries with the highest shrink as a percent of sales included Mexico, Brazil, Argentina, USA, and China. 

This past week, Jack L. Hayes, published his 26th annual USA Retail Theft Survey. Highlights of this latest report:

  • Almost 1.2 million shoplifters and dishonest employees were apprehended in 2013 by 23 USA large companies with recoveries totaling $199 Million. 
  • For shoplifters apprehensions were up 2.5% and the recovery dollars were up 4.5%.  For dishonest employees, apprehensions were up 6.5% and 2.5% for recoveries.
  • One in every 39.5 employees was apprehended for theft from their employer in 2013.
  • Per average case, dishonest employees steal 5.4 times the amount stolen by shoplifters ($706.21 vs $130.89).

Specifically to USA supermarkets, according to research conducted by FMI and the Retail Control Group:

  • 64% of store shrink is directly caused by a breakdown in or the absence of effective store operating best practices, while 36% of store shrink is caused by theft and / or other misdeeds. 
  • 55% of all shoplifting were attributed to individuals seeking personal gain.  55% of shoplifters were amateurs, 26% were professionals, and 19% was the result of organized retail crime (ORC).
  • Cashier theft accounted for 31% of shrink caused by theft and/or misdeeds.  35% of cashier theft was the result of sweethearting. 61% of cashier theft instances involved individuals with the company less than one year.  30% of cashier theft involved more than one cashier.  When multiple cashiers are involved, theft more than quadrupled to $814 per event. 

The average family pays an extra $2,000 a year to cover the losses from retail theft. 

Why people steal?

Research indicates that three conditions must exist before theft can occur: motivation and justification for the deviance, the opportunity or access to steal, and the low perception of risk. Summarized this is known as the theft triangle.  

Motivations and justifications for stealing are driven by four factors:

  1. Target attractiveness - Perceived value of item targeted.
  2. Motivation to steal - Most theft is unrelated to individual's particular economic motivation.
  3. Contributing factors - Items viewed as inanimate lack of commitment to the organization, and job dissatisfaction.
  4. Justification of the act - Too easy to do it, company will not miss it, company has a lot of money, etc. 

Technology and Retail Shrink

The first technology to successfully attack retail shrink was the cash register.  The cash register decreased the opportunity of employee theft by offering clear measurements on the sales taking place in the business. Another successful technology was Electronic Article Surveillance (EAS) which increased the risk of getting caught. 

"Big Data" analysis is a weapon now deployed across many major retailers to combat retail shrink. All store data sets can be mined for both shrink reduction and operational improvement. Increasingly these data sets are also linked to video for visual verification of the theft events. 

New rich data sets such as RFID and video analytics are emerging as weapons in the battle against retail shrink.  The most successful retailers have taken an integrated technology approach to both deter shrink and improve store operations. 

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