Retailers Lose Billions to Theft, Fraud and Human Error

Being a brick-and-mortar retailer isn’t easy these days. Aside from the obvious problem of having to compete with thousands of online retailers, you also must deal with shoplifters, dishonest employees and organized criminals taking a bite out of your bottom line. According to a report by the National Retail Federation, U.S. retailers lose 1.33 percent of sales on average to inventory shrink, i.e. a loss of inventory related to theft, shoplifting, error or fraud, costing the U.S. retail economy a total of $46.8 billion in 2017.

Having surveyed 63 retailers in the spring of 2018, the NRF found that shoplifting by external actors (including organized retail crime) was the biggest source of inventory loss in 2017, accounting for 35.7 percent of shrinkage on average. Internal theft by employees and others was close behind however, which is why most retailers take measures to ensure the integrity of potential employees, such as criminal conviction checks, verification of employment history, personal references and drug screenings.