Inventory loss due to shoplifting, employee or supplier fraud and administrative errors cost US retailers an estimated $44 billion in 2014, according to a survey by the National Trade Federation (NRF) and the University of Florida.
The survey, which during March and April interviewed 100 senior loss prevention executives from various retail sectors, found inventory shrinkage, or loss, averaged 1.38 percent of overall retail sales, which stood at $3.19 trillion in 2014.
Shoplifting accounted for the largest portion of the loss at 38 percent, followed by employee theft at 34.5 percent, administrative and paperwork theft at 16.5 percent, vendor fraud or error at 6.8 percent and unknown loss at 6.1 percent.
Average rates of shrinkage, however, decreased or remained flat for almost two-thirds of the retailers surveyed with grocery and supermarket chains reporting the highest average loss due to fraud.
A common misconception about shoplifting is that retailers can absorb the loss of a candy bar or a pair of jeans, said Bob Moraca, the NRF's vice president of loss prevention.
"The truth is that the industry loses billions of dollars each year at the hands of callous criminals that could be put toward human capital, promotions and other necessary business operations," Moraca said.
Among the executives interviewed for the survey, 39.4 percent said their fraud prevention budget for 2015 was up from last year, while 36.6 percent said it would remain at similar levels and 23.9 percent said they their budget to tackle fraud was lower than a year earlier.
Loss prevention budgets in 2014 averaged less than 1 percent of total 2014 sales.