Lessons To Be Learned From The NRF Retail Security Survey

A few weeks ago, the National Retail Federation published its 24th annual National Retail Security Survey in conjunction with its annual NRF PROTECT conference — estimating that American retailers lost $44 billion in 2014 due to shoplifting, fraudulent activities, and other shrinkage causes.

The study is the result of NRF’s strategic partnership with Dr. Richard Hollinger of the University of Florida. One hundred senior loss prevention executives from various sectors in retail were interviewed to uncover various findings to inventory shrink, employee integrity, external retail crime and more.

Lesson 1: Loss Prevention Technology Matters

Shrinkage is an enormous problem — a $44 billion problem to be exact.

Click here to tweet: Shrinkage costs US shoppers about $300 per household every year! #lossprevention

Tweet: Shrinkage costs US shoppers $300 per household every year! #lossprevention http://ctt.ec/5EJ0c+

Although there is some good news, this only represents 1.38% of retail sales — the lowest percentage in the survey’s history! This means that retail sales are growing faster than the shrinkage.

One reason for this is the availability and the implementation of sophisticated loss prevention technologies. It is safe to say that retailers who are utilizing the latest loss prevention technologies available to them are the ones seeing the results. Technology does matter.

Click here to tweet: Technology matters. Shrinkage % down in US for 1st time in 24 years. 

Tweet: Technology matters. Shrinkage % down in US for 1st time in 24 years. http://ctt.ec/cdvrz+


Lesson 2: Employee Theft Is Not Dealt With Effectively

According to the study, the losses in 2014 break down into the following categories:

  • Shoplifting (37%)
  • Employee/internal theft (34.5%)
  • Administrative and paperwork errors (16.5%)
  • Vendor fraud or error (6.8%)
  • Unknown loss (6.1%)


While external shoplifting is still the main cause of shrinkage, employee theft is a very close second!

However, internal fraud and even outright stealing is a very touchy topic among employers. Without sufficient evidence, addressing sweethearting or other criminal activities by employees is difficult — if not impossible.

Retailers need to find the cause of employee theft in their stores and then search for ways to eliminate these. This might be a more controlled POS environment, securing backrooms with remote access control systems or by using RFID to account for all products at any point in time.

Lesson 3: Loss Prevention Budgets Are Going Up

The third lesson is that retail executives realize the importance of reducing shrink and invest accordingly. According to the study, 39.4% of those surveyed say their budget for 2015 increased over last year; just over one-third (36.6%) said their budgets would be similar to what they were last year — leaving 23.9% of respondents with decreased resources.

However, no matter how big your budget is, your funds have to be spent wisely. With the complexities and demands on store operations and security personnel increasing, retailers have to choose very carefully which solutions to implement.

For loss prevention professionals, it is important to select solutions that provide a lower total cost of ownership to the organization. By choosing technology with an open architecture, it allows for the integration into other systems with the purpose of generating valuable and actionable intelligence.

What did you learn?

Did you have a chance to read the NRF Retail Security Survey? What were your key takeaways? We would love to hear them – just sound off in the comments below.