Loss prevention is a focus for every retail business. At the center of this focus is inventory shrinkage. Inventory shrinkage refers to a discrepancy in the amount of product a merchant should have available to them based on records and the amount of product that merchant actually has on shelves to sell. Plenty of factors can cause inventory shrinkage, including simple errors. Yet, internal and external loss remains the biggest cause of inventory shrinkage in most retail locations.

To better understand inventory shrinkage, its effects, and what you can do to prevent it, take a look at these shocking industry statistics.

How Much Is Lost?

According to a National Retail Security Survey from 2018, $46.8 billion of inventory shrinkage occurred across the industry in 2017. That accounts for 1.33 percent of all retail sales. Even more concerning, this figure grew by 1.44 percent between 2016 and 2017, highlighting that inventory shrinkage is on the rise across the retail industry. 

Retail Loss by the Numbers

Retail loss comes in many different forms, including Organized Retail Crime, personal shoplifting, and employee theft. 

Senseon Plus provides a new and cutting-edge security solution for retailers struggling with retail loss.

Senseon Plus provides a new and cutting-edge security solution for retailers struggling with retail loss.

Organized Retail Crime refers to professional shoplifting events, retail crime rings, cargo theft, and other types of crime committed by one or more people in a planned event. Consider the risks in these scenarios:

  • Organized Retail Crime costs $30 billion each year for the industry as a whole, according to the National Retail Federation (NRF)
  • Just 54.7 percent of upper management understands the severity and complexity of these losses, according to NRF
  • An estimated 71.3 percent of retailers said they saw Organized Retail Crime increase year over year, making it an ongoing problem, according to NRF

Other types of losses exist as well, including personal shoplifting. It’s happening and it is easier than most people believe, according to a Facefirst study.

  • 60 percent of shoplifters enter the location at least two separate times before they attempt to steal something
  • 20 percent of shoplifters visit three or more locations of the same retail chain
  • An estimated 44 percent of those who are shoplifters will engage in violence during an attempt, putting employees and other customers at risk

Another common cause of retail loss is employee theft. Companies without any type of employee theft deterrents are likely to see an increasing amount of inventory shrinkage, especially for highly sought-after items. The most common types of employee-related theft include:

  • Misappropriating funds
  • Fraudulent use of discounts
  • Fraudulent refunds
  • Credit card theft
  • Cash drawer theft
  • Product theft

One of the most effective ways to deter this type of theft is through the use of cameras that employees know are present. Additionally, using a cabinet-level access control system within cabinets and display cases can help to deter the theft of product and curb over-the-counter losses.

Why It Matters

The setup of any retail establishment can make a big difference in the outcome of companies. In many ways, retailers can save money by just changing a few key things.

Senseon offers cabinet-level access control systems, which better protect merchandise by requiring users to present valid credentials before unlocking cabinets and display cases. These systems can withstand 250 lbs. of break force. In addition, if a cabinet is left unlocked, an auto relock feature ensures merchandise is not left unprotected. 

For retailers requiring an additional layer of protection and control, Senseon Plus offers advanced security features, including alarm/alert functionality and dual authorization. Senseon Plus is also compatible with an innovative cloud-based audit trail software, which enables managers to track access and monitor employee activity. 

Senseon Plus enables managers to track access and monitor employee activity, better protecting valuable merchandise from internal and external theft.

Using an innovative cloud-based audit trail software, Senseon Plus enables managers to track access and monitor employee activity, better protecting valuable merchandise from internal and external theft.

Taking simple measures to stop inventory shrinkage, such as installing a cabinet-level access control system, can help businesses significantly reduce losses and put more profits into their hands.

Although inventory shrinkage is a costly problem, it can be significantly improved with the right tools and resources in place. Contact us today to learn more about the retail security solutions we provide.