Five takeaways from the National Retail Security Survey

7 Comments | This entry was posted in Loss Prevention

The final results of the National Retail Security Survey were released to industry executives just a few days ago. The quick findings: retail shrinkage averaged 1.51 percent of retail sales in 2008, up from 1.44 percent in 2007. Total merchandise losses increased to $36.3 billion, up from $34.8 billion in 2007.

nrss coverInstead of walking through all the findings—which retailers, law enforcement, and members of the media can request for free—I wanted to share five of the most interesting takeaways from the report.

1) Collusion is key. As a percentage of shrink, employee theft is down and shoplifting is up. Additionally, findings suggest that employees may be conspiring with people outside of the company to steal. This year’s survey found 14% of internal cases involved collusion between employees and outside actors, which further validates our opinion that external co-conspirators play a greater role than once thought. When we factor in collusion by outside actors we now have clear data to show external theft leads as the primary cause of shrinkage in retail stores. (Read a Security Director News article from this week which sheds more light on this issue.)

2) Fewer cases but more theft. While the number of employee theft cases decreased last year, the average case nearly doubled to $2,672. This could very well be a direct result of less loss prevention and management personnel, reduced employee training hours and the reduction in core loss prevention controls in an effort to “streamline” operations. (Read a recent STORES article on this topic for more info.)

This was also the case for shoplifting: the number of cases was down, but retailers reported a 59% increase in the average shoplifting case last year. Because dollar loss is a factor in deciding prosecutions, more shoplifting suspects were taken to court. With an average of $549 per case, even the most liberal prosecution thresholds would be met.

3) Thieves are getting more physical. Retailers reported internal and external suspects were more aggressive in the amount of product stolen per incident. It has been widely discussed that retail criminals are becoming more violent in nature, placing our employees, consumers, security and law enforcement at greater risk of injury.

As a result, retailers must spend more time on employee training covering company policies about apprehending suspected shoplifters, offering specific guidance on what to do (and what not to do) in each situation. Also, now that this trend is clearly documented, retailers will need to examine where program recovery efforts or new spending will need to occur.

4) Burglaries and robberies quadrupled. Retailers are also reporting an alarming rise in burglary and robbery incidents, which were four times higher than 2007. (This is a trend also noted in the FBI’s latest Uniform Crime Report.) And these crimes are costly: retailers lost an average of $5,000 each time a store was hit. The increase of burglary and robbery activity is particularly disturbing because these losses are not necessarily reflected in the total shrinkage loss estimates.

5) Budgets are shrinking, but… Many retailers made deep spending cuts across the board last year and loss prevention professionals were not immune. To avoid a setback in the shrink improvements the industry has experienced over the past five years, the loss prevention expertise will be more important now than ever.

That said, even though retailers’ LP budgets were being cut, companies still spent an estimated $8.2 billion on loss prevention expenses. Need a comparison to realize just how huge that number is? It’s similar to the annual revenues of major retailers like Nordstrom and Whole Foods.

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7 Comments

  1. Posted October 14, 2009 at 1:32 pm | Permalink

    I’m particularly impressed with the posting/article “The five takeaways from the National Retail Security Survey” in terms of it’s succinctness. In essence, it’s a true “executive summary” and the first time I’ve seen this important survey so condensed. Thanks, Joe. I’m in the process of seeking permission to reprint part of this article in the International Association of Professional Security Consultants (IAPSC) newsletter. In my view the growth of internal dishonesty in retail is no more than a preview of internal misconduct in all industries and should help guide LP/Security executives, practitioners and consultants in their overall strategies to reduce loss, irrespective of the nature of the business.

  2. Posted October 14, 2009 at 1:51 pm | Permalink

    You mention that, “Retailers are also reporting an alarming rise in burglary and robbery incidents, which were four times higher than 2007″

    However, when looking at the FBI’s UCR stats for burglary ( http://www.fbi.gov/ucr/cius2008/offenses/property_crime/burglary.html ), they report only a modest increase in burglaries – nowhere close to the 400% you mention.

    Can you explain this? Am I looking in the wrong place?

  3. avatar Joe LaRocca
    Posted October 14, 2009 at 3:15 pm | Permalink

    John, you are right. I should have stated in my post that the Uniform Crime Report also shows an increase but the surge is not as substantial as the 400% increase we saw in the National Retail Security Survey. I apologize if the sentence was misleading. Certainly let me know if you have any other questions.

  4. Posted October 17, 2009 at 12:37 pm | Permalink

    In defense of Joe’s 400% increase in burglaries and robberies, please understand the UCR data is a reflection of a universally collected data base (the whole country) versus the sampling of specifically participating merchants which represent but a miniscule and specific “community” and in those small sampling, variances are very dynamic. For example, in a small town if a group of boys go on a home burglary rampage within a given year, the UCR statistics will be skewed
    higher both in number of burglaries and in the percentage increase, over the preceding year.
    The Uniform Crime Report does tend to “flatten-out” the highs and lows.

  5. Posted October 19, 2009 at 6:15 pm | Permalink

    This is an excellent article about the findings regarding theft in stores. There are many ways to deter theft in the retail store but I believe a two way radio is the most cost efficient solution. Consider the Motorola CLS1110, a small lightweight durable radio designed with the Retailer in mind. Small, compact, and lightweight, the Motorola CLS1110 helps store staff identify and address shopllifters before they get out of the store. Working as a team, police can be contacted and the shoplifter restrained at the touch of a button. Visit http://www.2wayradiodirect.com or call us today to learn more about how Motorola two way radios can help your operation.

  6. Posted October 27, 2009 at 1:46 pm | Permalink

    Here at FlashFog we have noticed about a doubling of smash and grab burglary in the last year or so. We are seeing burglars travel long distances to hit specific stores, which points to increased professionalism in their “industry”. Smash and Grab is particularly bad in Georgia.

  7. Posted August 13, 2010 at 6:44 am | Permalink

    When I had my shop in London, I had attempted break ins, but they couldn’t get past my sheet steel plated back door, I alsi had three Chubb deadlocks on it with hinge bolts, works fine !
    I did get a threat by a guy with a knife, but I pulled out a bigger one and said come on then, he ran off !

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