Survey shows retail theft has a multi-billion dollar impact on U.S. economy; Retailers lose $25.62 billion due to theft

Business Wire, Nov 28, 1995

DEERFIELD BEACH, Fla.--(BUSINESS WIRE)--Nov. 28, 1995--A comprehensive national retail industry survey released today revealed that retailers lost $25.62 billion, or 1.83 percent, of their total 1994 annual sales to a combination of employee and customer theft, administrative error and vendor fraud.

Results of the 1995 National Retail Security Survey (NRSS) indicated that employee theft and shoplifting have a multi-billion dollar impact on the economy. In 1994, American retail employees stole nearly $10 billion from their employers, while retail customers - shoplifters - are estimated to have stolen $9 billion. This year's loss percentage figure of 1.83 percent is down slightly from last year's figure of 1.95 percent.

The survey was conducted by the Security Research Project at the University of Florida and funded through a research grant from Sensormatic Electronics Corp. (SRM/NYSE). It collected data via an anonymous questionnaire from 341 retail companies representing 24 different vertical market segments, excluding restaurants, bars, vehicle dealers, auto service stations and direct catalog sales.

Among the survey highlights:

o Loss prevention executives attributed 39 percent of their

annual shrinkage losses to employee theft, 35 percent to

shoplifting, 20 percent to administrative error and six

percent to vendor theft.

o The highest levels of losses were reported by music and video

stores (3.08%), books and magazines (2.62%), toys and hobbies

(2.49%), discount stores (2.27%), cards and gift stores

(2.21%), drug stores (2.14%) and optical retailers (2.0%).

o Average or near average losses were reported by home center

and hardware stores (1.92%), men's apparel (1.88%), full-line

department stores (1.87%), women's apparel (1.86%) and auto

parts (1.75%).

o The lowest levels of shrinkage were found among retailers who

control access to their merchandise, such as jewelry,

(1.29%), consumer electronics (0.92%), catalog showrooms

(0.92%) and furniture stores (0.70%).

o Eleven of the 25 loss prevention systems examined, including

burglar and silent alarms, "honesty shoppers," electronic

article surveillance (EAS) anti-theft tags, live closed circuit

television (CCTV), observation mirrors, locks and chains,

shoplifting deterrent signage, drop safes, plain-clothed

detectives and uniformed guards were being used regularly by

one-third or more of the respondents.

"Today's highly competitive marketplace does not permit retailers to accept these losses as merely the cost of doing business," said University of Florida sociology Professor Richard C. Hollinger, director of the study. "Retailers are fighting back with increasingly sophisticated loss prevention systems and procedures, put in place to deter and detect employee theft, shoplifting and other sources of loss."

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

"Source tagging has taken EAS to new levels of loss prevention effectiveness and efficiency," said Dennis C. Gillette, Senior Vice President for Sensormatic Electronics Corp. "Because security labels applied at the point of packaging or manufacture can be concealed within the package, the labels go unnoticed by shoplifters, eliminating chances for their compromise or defeat."

Gillette noted that advancements have also been made in the area CCTV, used to monitor customers and employees. "Today, CCTV is a powerful management tool that can link electronic cash registers to video surveillance systems to help eliminate employee theft at the register by detecting, documenting and deterring fraud, collusion, sweethearting, coupon misredemption and cash theft," said Gillette. "In addition, CCTV systems permit long-distance video monitoring of remote locations using standard telephone lines, whether it is around the block or across the country."

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

Copies of the full NRSS study may be obtained for a nominal charge by contacting Professor Richard Hollinger, Security Research Project, 3360 Turlington Hall, Box 117330, University of Florida, Gainesville, Fla. 32611-7330.

For a free executive summary of this survey, write to Sensormatic Electronics Corp., 500 N.W. 12th Avenue, Deerfield Beach, Fla. 33442, attention Louis Chiera.

Sensormatic Electronics Corporation, the world leader in electronic security, and the Official Electronic Security Supplier for the 1996 Olympic Games in Atlanta, is a fully integrated supplier of electronic security systems to retail, commercial and industrial markets.

The company's electronic article surveillance (EAS), closed circuit television (CCTV) and exception monitoring systems are used by soft goods and hard goods retailers to deter shoplifting and internal theft.