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How Much is Poor Loss Prevention Program Costing You?

Sadly, your store has product loss. It may be happening through shoplifting or employee theft, but it is happening. These losses might not seem like much. But few managers understand the real loss when you factor in things like profit margin. The US average retailer has about a 2% profit margin; even small losses hurt at that margin.

Last year, retail crime was one of the most fundamental problems facing big box stores, retail shops, and supermarkets. How big of a problem is it? Inventory shrinkage costs US retail businesses well over $45 billion a year.


The Cost in Numbers:

To truly get a look at the problem, it’s helpful to look at the statistics.

  • Money: Shrink involves some staggering numbers. According to the NRF, inventory shrink cost the US retail industry $46.8 billion. The average cost of return fraud was $1,766.27, with a median of $171, and the average price per shoplifting incident doubled to $559.
  • Percentages: The percentages involved are also incredible! According to the NRF, 36.5% of shrink is external, due to shoplifting. That’s more than employee theft, vendor fraud, and administrative errors. 41% of retail chains reported increases in total inventory shrink.
  • Most stores don’t recognize the problem: Despite the numbers involved, US grocery stores allocate only 0.36% of sales to reducing shrinkage, and 44% of shoplifters interviewed said that if an employee paid any attention to them while they were attempting to shoplift, it would deter them, so there are solutions.

The real cost of shrink goes beyond that. The truth is that there are many other areas that retail theft impacts upon. Retailers pay for various labor costs such as processing, merchandising, inventory control, and efforts to prevent losses. These expenses are very hard to quantify with accuracy. But retail theft makes stores less competitive; it lowers profits and increases prices. With that much on the line, it is a problem that can no longer be ignored.

Advance Solutions is constantly on the look-out for opportunities to expand our reach and work with more customers from different specializations. These varied experiences broaden our horizons as a firm, allowing us to serve you better.

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