As US retail gears up and gets back to business, theft prevention is set to again become a major priority.

Although statistics indicate theft events were down throughout 2020 due to store closures, of the events that did occur, the value of the amount stolen was higher, and stores deemed essential actually experienced a shoplifting increase.

Which begs the question, where is your retail theft occurring?

Because once you know where your risk is, you can devise the best strategies to mitigate loss.

The four major types of retail theft

Shoplifting

Shoplifting is often the theft issue that gets the most attention, and there’s good reason this is the case.

Shoplifting continues to be the number one cause of retail loss, with both amateurs and professional thieves contributing to the problem.

On the flipside, shoplifting is also one of the easiest problems to address, but it is imperative to have a multi-pronged approach that protects the store overall and items at a product-based level.

The top shoplifting prevention strategies include:

• Good store layout and lighting.

• Staff education and training.

• Electronic article surveillance involving security tags, security labels and pedestal antenna.

• CCTV.

• Loss prevention staff

Employee theft

Employee theft is a bit of a hidden epidemic, but the reality is each incident of employee theft costs a retailer more than general shoplifting.

That’s because employee theft often takes longer to identify and can take the form of false returns, gift card fraud, skimming or false reconciliation of inventory.

In fact, the 33rd Annual Retail Theft Survey by Jack L Hayes International found each incident involving a dishonest employee averaged $1219.61, which was up 3.8 per cent in 2020.

The top employee theft prevention strategies include:

• Screening of all prospective employees.

• Staff training.

• A good work environment with fair remuneration.

• Staff monitoring through CCTV and POS analytics.

Fraud

Fraud is becoming an increasing problem in retail theft, with perpetrators becoming more elaborate in their scams.

Some of the most common ways that fraud is committed to involve return fraud, credit card fraud, and gift card fraud.

Meanwhile, fraud is also an issue behind the scenes in terms of supplier fraud.

The best ways to mitigate the risk of fraud include:

• Returns and gift card policies and procedures.

• Staff training.

• POS analytics.

• Payment’s security.

• Inventory reconciliation upon receipt of goods.

Organized retail crime

One of the biggest scourges of the modern retail landscape is organized retail crime, which sees a group of thieves deliberately target a retailer to steal items in volume.

Organized retail crime is incredibly costly to retailers. The National Retail Federation notes Organized Retail Crime cost retailers an average of $719,548 per $1 billion in sales in 2020.

Perhaps more concerning is that organized retail crime is often accompanied by violence, with the NRF’s Organized Retail Crime Survey 2020 finding the majority of retailers reported thefts involved more violence in 2020 than they did in 2019.

Combatting organized retail crime involves:

• Training staff to identify the suspicious behaviour that can indicate an organized retail crime event is about to take place.

• Storewide security such as CCTV and loss prevention personnel.

• Electronic Article Surveillance.

• Secure cabinets and lockable drawers.

• Good store layout that prevents easy smash and grab events

The final word

In the coming months, retailers will be looking to make up for the lost ground of 2020, and that means the focus should return to theft prevention.

After all, increased foot traffic equals an increased risk of shoplifting, employee theft, fraud and organized retail crime.

You can find more resources for protecting your store against each here.

With retail on the rebound after the challenge of 2020, the concept of retail theft might be the furthest thing from store owners’ minds.

But, as retailers seek to embrace the return of foot traffic in-store, preventing loss should remain a major priority.

With that in mind, here are 10 retail theft statistics to keep you focussed on the battle at hand…

Retail theft at an all-time high

A significant portion of retail’s bottom line

The all-time high figure from 2019 equates to 1.62 per cent of retail’s annual bottom line, compared to 1.38 per cent in 2018.

Shrink rate rising

This industry’s high shrink value in 2019 was driven by an increase in the average shrink rate, with more and more retailers recording a shrink rate above 3 per cent.

The report found in 2019, 18.2 per cent of retailers reported a shrink rate of 3 per cent or higher (compared to just 10.9 per cent in 2018).

Covid saw shoplifting incidents down, but value up

With Covid lockdowns seeing much of the retail sector closed temporarily during 2020, there were fewer reported thefts, according to the 33rd Annual Retail Theft Survey by Jack L Hayes International.

Last year, shoplifting apprehensions were down 43.8 per cent and recovery dollars decreased 36.5 per cent.

However, the value of each incident increased. In 2020, shoplifting averaged $310.11, which was an increase of 13 per cent the year prior.

Dishonest employees remain a major issue

Like shoplifting, events involving dishonest employees decreased during the shutdowns of 2020.

In total, 26,463 dishonest employees were apprehended, according to the 33rd Annual Retail Theft Survey, but the value of each event was higher.

Last year each employee theft averaged $1219.61 (up 3.8 per cent in 2020).

Essential retail experiences a theft increase

While shutdowns reduced the opportunity for dishonest employee theft and shoplifting, the essential retailers that were open throughout 2020 experienced an increase in theft.

In essential retail, shoplifting rose 7.9 per cent while employee theft also rose 2.7 per cent.

Theft recovery costs money

For every $1 recovered by companies surveyed by Jack L Hayes International, $33.15 was lost to retail theft.

Therefore, only 2.9 per cent of total retail theft losses resulted in recovery.

Increased theft concern

The most recent National Retail Security Survey also found retailers were increasingly concerned about a number of loss trends emerging in-store.

The report noted in the past five years:

• 29 per cent of retailers viewed e-commerce crime as much more of a priority.

• 5 per cent saw organized retail crime as much more of a priority.

• 5 per cent viewed data breaches as much more of a priority.

• 3 per cent had been increasingly focussed on internal theft.

• 3 per cent viewed return fraud as much more of a priority.

Organized Retail Crime on the up

According to the Organized Retail Crime Survey 2020 by the National Retail Federation, Organized Retail Crime cost retailers an average of $719,548 per $1 billion in sales, which was up from $703,320 in 2019.

Greater aggression during thefts

The Organized Retail Crime Survey 2020 also noted the majority of retailers reported thefts involved more violence in 2020 than they did in 2019.

Almost a third of respondents (31 per cent) said perpetrators were much more aggressive, 26 per cent said they were somewhat more aggressive, 41 per cent reported the aggression was the same as the year prior and just two per cent said perpetrators were less aggressive.

You can read about strategies to combat shoplifting and retail loss here. Or, view our security tags and security labels.

The data is in and while reported incidents of shoplifting and employee theft declined in 2020, the value of each incident increased.

According to the 33^rd Annual Retail Theft Survey by Jack L Hayes International, over 184,000 shoplifters and dishonest employee were apprehended in 2020 by just 22 large retailers. In total over $81 million was recovered.

Here’s a breakdown of what the survey showed…

Fewer shoplifting incidents

Incident value increased

While the number of shoplifting and theft incidents was down, the value of each event increased significantly.

In terms of total thefts, each event averaged $440.48, which was up 19.2 per cent on the year prior.

Meanwhile, shoplifting averaged $310.11, which was an increase of 13 per cent and each employee theft averaged $1,219.61 (up 3.8 per cent in 2020).

The true cost of theft

The survey also took the time to dive a little deeper into how much was lost compared to how much was recovered.

“For every $1 recovered by our surveyed companies, $33.15 was lost to retail theft. Therefore, only 2.9% of total retail theft losses resulted in recovery,” they noted.

This figure is based on the assumption that annual retail sales of the participating companies were $508 billion and the average shrink rate was 1.62 per cent of sales according to the 2020 National Retail Security Survey.

The reasons behind shoplifting increases and decreases

Those stores which experienced a shoplifting increase cited the following reasons:

• ORC (Organized Retail Crime) continues to be a primary factor.
• fewer stores to choose/steal from.
• Saw significant increase in “theft for need”.
• Legislation increasing felony thresholds embolden thieves.
• More ‘hit n run’/fleeing shoplifters.

Meanwhile, those that noted a decrease in incidents attributed it to the following:

• Store closures resulted in fewer shoppers.
• Transition to deterrence/recovery during the pandemic.
• Closing of fitting rooms for extended periods of time.
• Focused on better customer service.
• Less LP/AP staff due to restructuring or transition.

The reasons behind employee theft increases or decreases

In terms of employee theft, retailers which experienced an increase attributed it to the following:

• More focus/attention towards associate theft.
• Improved technology/analytic tools resulted in more DE cases.
• Fewer associates in-store created more opportunities for dishonest employees.
• Increase in loyalty card fraud.
• Increase in discount abuse cases.

Those who enjoyed a decrease cited the reasons listed below:

• Store closures and furloughed associates.
• Less focus on apprehensions and more focus on pandemic issues.
• Better prevention with additional technology at POS.
• Reduced travel by LP/AP staff.
• Decrease in LP/AP staff due to restructuring or transition

You can find the full Annual Retail Theft Survey here, or see our top tips on loss prevention.

In a retail landscape where the consumer experience is designed to be frictionless and omnichannel is par for the course, returns are emerging as a major challenge for retailers.

Not only does handling returns cost a retailer time and money, but returned merchandise also presents a fraud liability and as Retail Dive recently noted, has a very real environmental impact as well.

Here’s an insight into the challenge that retailers now face when it comes to managing returns.

The returns reality

A fraud liability

Returns have always offered the potential for fraudulent activity, and as the NRF explains, last year was no different.

Of the returns made last year, they found roughly 5.9 per cent, or $25.3 billion worth, were fraudulent.

In online retail this percentage rose, with 7.7 per cent of returns to online retailers labelled fraudulent.

Ultimately that means for every $100 in returned merchandise accepted, retailers lose $5.90 to return fraud.

The hidden cost

When it comes to handling returns, it costs a retailer time and money, but often this isn’t measured.

There’s the cost of serving the customer as they make the return, then there’s the time involved with inspecting the packaging, and sending it back through the supply chain to get it back on the shelf (if indeed that’s where it is to end up).

Retail Dive recently argued measuring the cost of returns properly could improve the retailer’s bottom line.

They note most often, retailers look at their sales but do not look at returns, with the major reason being that data is often siloed throughout an organization.

Environmental issue

In addition to costing the retailer, Retail Dive also notes returns take a very real environmental toll, and in the future that could well impact the customer’s perception of an organization’s sustainability.

Many customers believe they make a return and it’s simply placed back on the store’s shelf or repackaged and resold online.

Often, that’s not the case. The item is instead directed to a landfill or destroyed, with around five billion pounds of goods ending up in landfill annually.

Then there’s also the further environmental cost of the transportation required to handle returned goods.

So, what’s the answer?

Finding a solution to the return challenge

Handling returns properly lies in retailers having a deep understanding of the process, its cost and its impact.

There should be policies in place instore to minimize fraudulent claims, while each retailer should be mapping exactly what happens in the returns process.

Then, Retail Dive argues it could be time to investigate new models that are designed to minimize the environmental impact and improve the retail bottom line.

You can read the recent Retail Dive article on sustainable returns here, or view the strategies available to reduce return fraud here.