Retail shrink nearly a $100B problem

Sep 15, 2022
Written by WR Communications

As a percentage of total retail sales last year, retail shrink led to $94.5 billion in losses, up from $90.8 billion in 2020, according to the 2022 National Retail Security Survey released yesterday. Organized retail crime (ORC) has been a key critical component of retail shrink, which has been an increasing challenge for retailers and the industry at large.

The survey determined that the average shrink rate in 2021 was 1.44%, a slight decrease from the previous two years but similar to the five-year average of 1.5%. Most retailers reported that in-store, e-commerce, and omnichannel fraud have risen.

Violence is a growing concern, and in many stores, employees have been injured by or experienced confrontations from retail thieves, many of which wield weapons, threatening injury. As a result, retailers have prioritized addressing guest-on-associate violence, external theft, and ORC. Retailers specifically cited an increase in violence (89.3%), shoplifting (73.2%), ORC, and employee theft (tied at 71.4%.) A majority of respondents (87.3%) said the pandemic increased overall risk for their organization.

Retailers reported a 26.5% increase in ORC, on average. Even more alarming, the vast majority (81.2%) said the violence and aggression associated with ORC increased in the past year.

Retailers are prioritizing new resources to safeguard their customers, employees, and operations, with nearly half (44.5%) indicating loss prevention as an area of investment. More than half (60.3%) are increasing their technology budget, and 52.4% are increasing their capital and equipment budget. As part of these efforts, many are investing in various technologies, including RFID, computer vision at point of sale, and license plate recognition.

“Reducing instances of violent crime, particularly those affiliated with ORC, is a key priority among retailers because it directly and immediately impacts employees in numerous capacities,” Loss Prevention Research Council Senior Research Scientist Cory Lowe said. Employees have been reluctant to speak publicly about their concerns and frustrations with the sometimes-violent work environments.

As retailers implement additional measures to diminish and ultimately prevent ORC-related incidents from occurring, policy reform is still needed. Most respondents (70.8%) reported an increase in ORC, where felony thresholds have increased. Retailers desire stronger ORC legislation, especially at the federal level, and better enforcement of existing laws.