Although the U.S. may be out of the pandemic, retail continues to feel the unforeseen impacts, with theft and shrink increasing to a nearly $100 billion dollar problem.
According to a recent study, the industry-wide shrink was 1.4% last year. The factors contributing to retail shrink have multiplied in recent years, and organized retail crime (ORC) is a burgeoning threat within the retail industry.
Surveyed retailers confirmed that the COVID pandemic had created increased business challenges. Specifically,
- 7% of respondents said the pandemic had increased the overall risk for their organization
- 3% of retailers specifically cited an increase in violence
- 2% reported more shoplifting
- 4% citing increased organized retail crime and employee theft
Research indicates ORC groups target easily concealable, removable, available, valuable, enjoyable, and disposable items. According to the study, crime experts said apparel, health and beauty, electronics, accessories, food and beverage, footwear, home furnishings, eyewear, office supplies, infant care, and toys, are the most targeted by ORC.
The survey also revealed that large and small retailers are ramping up their loss prevention teams. The largest retailers, including Walmart, Costco, and Home Depot, average more than 2,000 employees working in their loss prevention teams. About one-third of the surveyed retailers plan to add up to 10% more employees for loss prevention this year.
The survey found retailers attribute the most significant portion of shrink to external theft, including organized crime, averaging 37% of their losses. Employee theft averaged 28.5% of the total shrink, and 25.7% is blamed on process or control failures, including bad checks, fraudulent returns, and usage of fake coupons.