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

Decade-Long Trend: Retail Shrinkage Rate Steadily at 1.4%.

Important takeaway:

Insight from DataRationale
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 DataRationale
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 DataRationale
Significant financial impactRetail shrink led to a near $100 billion loss, suggesting it’s a major concern for the industry.
High proportion of salesAt 1.44% of sales, the shrinkage is not a minor issue; it represents a substantial fraction of potential revenue.
Urgent need for mitigation strategiesSuch 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 DataRationale
Drastic surge in shrink costsA 53.16% increase in just two years is alarming, signifying major changes or challenges in the retail environment.
Potential impact on profitabilitySuch a significant rise can directly erode profit margins, compelling retailers to rethink pricing, operations, or security strategies.
Imperative for proactive measuresThe 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 DataRationale
External theft as the primary culpritAlmost 4 in 10 cases of shrinkage are due to external theft, pinpointing a major vulnerability in retail security.
Internal threats are nearly as significantEmployee theft accounting for over a quarter suggests that retailers must also focus internally, not just on external threats.
Operational inefficiencies cannot be ignoredProcess 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 DataRationale
Unprecedented rise in shrink ratesAn 81% increase within a year is not only significant but also suggests an acute challenge facing the retail sector.
Imminent threat to profit marginsSuch a drastic hike in shrink rates can severely impact the profitability, necessitating immediate counteractive measures.
Reevaluation of current practices is crucialThis 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.

Store theft accounts for 40% of retail shrinkage

Important takeaway:

Insight from DataRationale
Store theft is a dominant shrinkage factor40% attribution to store theft highlights it as a chief concern, reflecting a crucial vulnerability in retail security.
Essential focus on in-store securityThe prominence of store theft necessitates retailers to prioritize in-store security measures and training.
Potential for improved loss preventionWith 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 DataRationale
Positive trend in shrink rate reductionThe 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 operationsThis reduction indicates that retailers may have refined their processes or tightened security measures between 2020 and 2021.
Continuous vigilance remains criticalWhile 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 DataRationale
Employee theft is a significant concernWith 28.5% of retail shrinkage attributed to internal theft, it emerges as a critical issue demanding immediate attention.
Internal vigilance is as vital as externalThe substantial proportion suggests that internal controls and monitoring are just as crucial as warding off external threats.
Necessity for enhanced employee training & screeningGiven 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 DataRationale
Alarming surge in high shrink rate reportingThe doubling in businesses reporting 3% or higher shrink rates signals a dramatic shift or challenge that surfaced in 2021.
Potential wider industry challengeSuch a significant increase in reports might indicate an industry-wide trend or vulnerability rather than isolated incidents.
Pressing need for sector-wide response strategiesThis marked upsurge underscores a collective imperative for retailers to collaborate, share insights, and develop mitigation approaches.

Source: Shopify