Retail shrinkage is a persistent concern, with the average rate lingering around 1.4% for years, amounting to a substantial $94.5 billion loss in 2021, or 1.44% of sales.
The issue intensified in 2022 as retailers reported an 81% increase in shrinkage.
To elucidate this persistent and growing challenge, let me share the most crucial retail shrinkage statistics you should be aware of right away. 🚨💰📉
Retail Shrinkage Statistics: The Key Data
- The average retail shrinkage rate has hovered around 1.4% for over a decade.
- Retailers report 26.5% increases in organized retail crime, employee theft, violence, and omnichannel fraud.
- Retail shrink cost retailers $94.5 billion in 2021, 1.44% of sales.
- Retail cost increased 53.16% in last two years due to shrink.
- Most retail shrinkage is caused by external theft (37%), employee theft (28.5%), and process or control failures (25.7%).
- Retailers reported 81% shrinkage increases in 2022.
- Store theft accounts for 40% of retail shrinkage.
- The average shrink rate as a percentage of sales dropped to 1.4% in 2021 from 1.6% in 2020.
- Employee internal theft accounted for more than a quarter (28.5%) of retail shrinkage.
- In 2021, nearly twice as many businesses reported shrink rates of 3% or higher than in previous years.
Sources: (CBS 58, Investors, Chain Storeage, NRF, Forbes, Tony Donofrio, Linkedin, CNN, CNBC, Shopify.)
More Retail Numbers: Retail Facts
Table of Contents
Decade-Long Trend: Retail Shrinkage Rate Steadily at 1.4%.
Important takeaway:
| Insight from Data | Rationale |
| Stable retail shrinkage trend. | The shrinkage rate has consistently remained around 1.4% for a long period. |
| No significant improvement. | Despite advances in technology and retail management, shrinkage has not significantly reduced. |
| Predictability in loss management. | Businesses can anticipate and budget for this known percentage, given its historical consistency. |
Source: CBS 58
Retailers Flag 26.5% Spike in Organized Crime, Employee Theft, and Omnichannel Fraud.
Important takeaway:
| Insight from Data | Rationale |
| Significant rise in organized retail crime. | The reported 26.5% increase suggests that criminal organizations are targeting retailers more. |
| Employee theft is on the uptick. | The inclusion of employee theft in the 26.5% rise indicates possible internal vulnerabilities. |
| Omnichannel fraud and violence are escalating. | This highlights the need for better security measures across multiple sales channels and in physical locations. |
Source: Investors
$94.5 Billion Lost to Retail Shrink in 2021, a 1.44% Sales Impact.
Important takeaway:
| Insight from Data | Rationale |
| Significant financial impact | Retail shrink led to a near $100 billion loss, suggesting it’s a major concern for the industry. |
| High proportion of sales | At 1.44% of sales, the shrinkage is not a minor issue; it represents a substantial fraction of potential revenue. |
| Urgent need for mitigation strategies | Such a substantial financial hit indicates that retailers might need more effective anti-shrinkage solutions. |
Source: Chain Storeage
Two-Year Retail Cost Surge: 53.16% Rise Attributed to Shrink.
Important takeaway:
| Insight from Data | Rationale |
| Drastic surge in shrink costs | A 53.16% increase in just two years is alarming, signifying major changes or challenges in the retail environment. |
| Potential impact on profitability | Such a significant rise can directly erode profit margins, compelling retailers to rethink pricing, operations, or security strategies. |
| Imperative for proactive measures | The exponential growth rate underscores an urgent need for retailers to devise and implement strategies to counteract shrink. |
Source: NRF
Retail Shrink Sources: External Theft (37%), Employee Larceny (28.5%), Process Failures (25.7%).
Important takeaway:
| Insight from Data | Rationale |
| External theft as the primary culprit | Almost 4 in 10 cases of shrinkage are due to external theft, pinpointing a major vulnerability in retail security. |
| Internal threats are nearly as significant | Employee theft accounting for over a quarter suggests that retailers must also focus internally, not just on external threats. |
| Operational inefficiencies cannot be ignored | Process or control failures contributing to a quarter of shrinkage indicates that retailers need to streamline and bolster their operational practices. |
Source: Forbes
A Staggering 81% Increase in Retail Shrink Reported in 2022.
Important takeaway:
| Insight from Data | Rationale |
| Unprecedented rise in shrink rates | An 81% increase within a year is not only significant but also suggests an acute challenge facing the retail sector. |
| Imminent threat to profit margins | Such a drastic hike in shrink rates can severely impact the profitability, necessitating immediate counteractive measures. |
| Reevaluation of current practices is crucial | This steep rise indicates that existing preventive strategies might be ineffective, and there’s a pressing need to overhaul or reinforce security and operational protocols. |
Source: Tony Donofrio
Shoplifting Contributes to 40% of Retail Shrink.
Important takeaway:
| Insight from Data | Rationale |
| Store theft is a dominant shrinkage factor | 40% attribution to store theft highlights it as a chief concern, reflecting a crucial vulnerability in retail security. |
| Essential focus on in-store security | The prominence of store theft necessitates retailers to prioritize in-store security measures and training. |
| Potential for improved loss prevention | With store theft making up a significant portion of shrink, there’s a substantial opportunity to reclaim profits by addressing this particular challenge effectively. |
Source: Linkedin
Retail Shrink Rate Dips to 1.4% in 2021, Down from 1.6% in 2020.
Important takeaway:
| Insight from Data | Rationale |
| Positive trend in shrink rate reduction | The decline from 1.6% to 1.4% demonstrates an improving scenario for retailers, suggesting that interventions or strategies employed might be taking effect. |
| Incremental progress in retail operations | This reduction indicates that retailers may have refined their processes or tightened security measures between 2020 and 2021. |
| Continuous vigilance remains critical | While the decrease is commendable, the persistence of a 1.4% shrink rate underscores the ongoing importance of addressing retail shrink to further safeguard profits. |
Source: CNN
Employee Theft Behind 28.5% of Total Retail Shrink.
Important takeaway:
| Insight from Data | Rationale |
| Employee theft is a significant concern | With 28.5% of retail shrinkage attributed to internal theft, it emerges as a critical issue demanding immediate attention. |
| Internal vigilance is as vital as external | The substantial proportion suggests that internal controls and monitoring are just as crucial as warding off external threats. |
| Necessity for enhanced employee training & screening | Given the prominence of employee theft, retailers might need to reevaluate hiring practices, training programs, and inculcate a stronger sense of organizational integrity. |
Source: CNBC
2021 Sees Double the Businesses Reporting Shrink Rates Above 3% Than Prior Years.
Important takeaway:
| Insight from Data | Rationale |
| Alarming surge in high shrink rate reporting | The doubling in businesses reporting 3% or higher shrink rates signals a dramatic shift or challenge that surfaced in 2021. |
| Potential wider industry challenge | Such a significant increase in reports might indicate an industry-wide trend or vulnerability rather than isolated incidents. |
| Pressing need for sector-wide response strategies | This marked upsurge underscores a collective imperative for retailers to collaborate, share insights, and develop mitigation approaches. |
Source: Shopify
