UF Survey Shows Retail Theft Has A Multibillion Impact On U.S. Economy

November 21, 1996

GAINESVILLE — A comprehensive national retail industry survey released today reveals retailers lost $27 billion, or 1.87 percent of their total 1995 annual sales to a combination of employee and customer theft, administrative error and vendor fraud.

Results of the 1996 National Retail Security Survey (NRSS) indicate employee theft and shoplifting have a multibillion dollar impact on the economy. In 1995, American retail employees stole more than $10.4 billion from their employers, while retail customers — shoplifters — are estimated to have stolen more than $9.7 billion. This year’s loss percentage figure of 1.87 percent is up slightly from last year’s figure of 1.83 percent.

The survey was conducted by the Security Research Project at the University of Florida and funded through an unrestricted research grant from Sensormatic Electronic Corp. It collected data via an anonymous questionnaire from 311 retail companies representing 24 different vertical market segments, excluding restaurants, bars, vehicle dealers, auto service stations and direct catalog sales.

Among the survey’s highlights:

  • Loss prevention executives attributed 38.4 percent of their annual shrinkage losses to employee theft, 35.8 percent to shoplifting, 19.4 percent to administrative error and 6.4 percent to vendor theft.
  • The retail market segments reporting the highest levels of losses were camera and photo (5.50 percent), optical (3.93 percent), recorded music and video (2.50 percent), cards, gifts and novelties (2.49 percent), discount stores (2.14 percent), jewelry (2.10 percent), department stores (2.07 percent), specialty apparel (2.04 percent) and furniture (2.02 percent);
  • Average or near average losses were reported in women’s apparel (1.94 percent), books and magazines (1.91 percent), auto parts (1.82 percent), supermarkets and grocery stores (1.78 percent), drug stores (1.75 percent), toys and hobbies (1.63 percent), home center and hardware stores (1.60 percent) and sporting goods (1.50 percent).

  • *The lowest levels of shrinkage were found among retailers who control access to their merchandise, such as liquor, wine and beer (0.39 percent) and consumer electronics (0.33 percent).

  • Respondents reported an average loss of $142.49 per shoplifting incident, $737.31 per employee theft incident and $2,410.33 per armed robbery incident.
  • Fourteen of the 25 loss prevention systems examined, including burglar and silent alarms, live closed circuit television, electronic article surveillance (EAS) anti-theft tags, “honesty shoppers,” drop safes, locks and chains, plain-clothed detectives and uniformed guards were being used regularly by one-quarter or more of the respondents.

“In today’s extremely competitive retail marketplace, retailers cannot remain profitable incurring even minimal levels of loss attributable to employee theft, customer shoplifting, vendor fraud or administrative error,” said UF sociology Professor Richard C. Hollinger, director of the study. “Over the past six years we have noted an increasing reliance upon technologically sophisticated electronic devices to monitor the performance of retail personnel and the whereabouts of merchandise and cash.”

The National Retail Security Survey projects that during the coming year shoppers will notice increased use of a number of new loss prevention technologies, including EAS tags and closed circuit television.

“A new generation of EAS tags are being deployed that incorporates the security tag inside the packaging materials or is built into the product itself,” Hollinger said.

The University of Florida’s Security Research Project mission is to provide a reliable and unbiased source of research, statistics and information on topics related to private security and retail loss prevention, Hollinger said.

Copies of the full NRSS study may be obtained for a nominal charge by contacting Professor Richard Hollinger, Security Research Project, 3219 Turlington Hall, Gainesville, Fla. 32611-7330. For a free executive summary of this survey, contact Sensormatic Electronics Corporation at 1-800-368-7262.