New Report Shows Retail Inventory Shrinkage on the Rise

retailer worried about inventory shrinkage

If your store is finding it harder and harder to account for inventory, it could be part of a larger criminal trend that’s cutting into the bottom line for businesses across the retail industry. According to a new report by the National Retail Federation (NRF), retail inventory shrinkage hit $45.2 billion in 2015—a jump of $1.2 billion over the previous year.

The total figure, which represents about 1.38% of sales for retailers, is attributed to multiple sources. The most significant of those is shoplifting, amounting to an average loss of $377 per incident. That’s an increase of nearly $60 from 2014.

Highlights from the Report:


  • On average, inventory shrink accounted for 1.38% of sales ($45.2 billion) in 2015
  • Shoplifting was the biggest cause of retail loss, at 39% of all incidents
  • Jewelry stores experienced very high losses per incident
  • Nearly 50% of retailers reported higher inventory shrink in 2015 over 2014

Part of the issue, according to the NRF, is the growing complexity of loss prevention as the overall retail landscape continues to evolve. As loss prevention techniques and technology advance, criminals are finding new ways to exploit vulnerabilities.

The report also highlights a spending freeze on loss prevention, even as 47% of retailers surveyed reported higher levels of inventory shrink in 2015. Year-over-year, retailers have been reluctant to keep their loss prevention budget in step with sales numbers.

A Mixed Bag for Retailers


But the news isn’t all negative. Although the total number of reported employee theft incidents increased in 2015, the average loss value of those incidents decreased from $1,546.83 to $1,233.77. Likewise, employee prosecutions and terminations were down, according to the NRF.

These findings are consistent with the Annual Retail Theft Survey by Jack L. Hayes International. According to the 28th edition of the annual survey, which gathered responses from 25 major retailers with more than 20,000 stores, apprehensions of shoplifters and dishonest employees has increased in 9 of the past 10 years.

the NRF continues to encourage its members to improve their loss prevention efforts, such as investing in more sophisticated retail security systems

Of those companies surveyed, 60% reported an increase in retail inventory shrinkage in 2015. One result of the increase in shoplifting and employee theft incidents is that consumers are being asked to pay higher prices—something that’s hurting the bottom line for retailers, according to the report’s authors.

On a positive note, the total recovery dollars from apprehended shoplifters and dishonest employees rose by 1.2% from the previous year.

It’s difficult to draw conclusions from the increase in apprehensions and the value of recovery dollars. But the NRF continues to encourage its members to improve their loss prevention efforts, such as investing in more sophisticated retail security systems and building stronger relationships with law enforcement.

Being Proactive with Retail Loss Prevention


Don’t pass along the cost of inventory shrink to your customers. Whether you’re selling the finest jewelry or inexpensive items that make life just a little better, your business can benefit by taking a proactive approach to retail inventory shrinkage.

With in-depth technical expertise and an understanding of the unique challenges facing retailers today, ABC can help you identify the right products for your store—from high-tech security and access systems to video surveillance kits designed specifically for small business. Talk us today to learn more about how we can help or to schedule an on-site assessment of your store.

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