Richard Hollinger, Ph.D. Security Research Project 2005 National Retail Security Survey: Preliminary Report.

Richard Hollinger, Ph.D.Security Research Project

2005 2005 National National

Retail Retail Security Security Survey:Survey:

Preliminary Preliminary ReportReport

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Inventory Shrinkage as % of Sales

1.791.91 1.88 1.95

1.83 1.871.77 1.72 1.69

1.81.7

1.651.54

1.6

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

1991 1992 1993 1994 1995 1996 1997 1998 2000 2001 2002 2003 2004 2005

Shinkage levels by Category

• Average or above:• Accessories = 4.7 (4)• Home Center, etc. = 3.2 (9)• Crafts/Hobbies = 2.6 (1)• Supermarket = 2.4 (11)• Drug / pharmacy = 2.2 (8)• Women’s apparel= 1.6 (11)• Men & Women’s app = 1.6 (13)

• Below Average:• Department store = 1.5 (18)• Household furnishings = 1.5 (6)• Children’s apparel = 1.4 (3)• Cards, gifts, etc = 1.4 (6)• Discount/Mass merchandise = 1.3 (15)• Sporting Goods = 1.3 (6)• Jewelry/Watches = 1.2 (5)• Entertain, media, games, etc = 1.1 (4)• Shoes = 1.1 (7)• Men’s apparel= 1.1 (2)• Optical = .74 (1)• Office Supplies = .83 (2)• Consumer Electronics, appliance = .81

(4)• Books, Mags & Music = .67 (1)• Liquor, wine, beer, tobacco = .58 (2)• Warehouse, club, etc. = .55 (2)• Furniture = .21 (3)• Cameras/Photo = .03 (1)

146 retail chains responded146 retail chains responded

136 = gave valid shrinkage %136 = gave valid shrinkage %

(All presented numbers may change slightly in the (All presented numbers may change slightly in the Final ReportFinal Report))

Annual Financial ImpactAnnual Financial Impact

Retail Sales = $2,334,750,000,000

Shrinkage % = x .016

_____________________________

Total $ Loss = $37,356,000,000

That’s nearly 37.4 Billion dollars!!

Sources of ShrinkageSources of Shrinkage

Employee Theft47.6%

Shoplifting32.6%

Vendor Fraud5.2%

Admin. Error14.6%

$ 12.2 Billion

$ 17.8 Billion

$ 5.5 B $ 1.9 B

$265.40

$1,762

$621.67

$1,238.27

$854.83

$1,053.24

Shoplifting

Employee Theft

2005

2004

2003

Average $ Loss Per Case

Organized Retail Crime Statistics

• Only one-third are tracking ORC data• Averaged 23.2 cases per $100 M in sales• $46,353 dollar loss per case on average

Organized Retail Crime Task Force?

NO (80%)

YES (10%)

Missing(10%)

Cash, Check & Charge Losses(as a % of total annual sales)

0.25 0.25

0.08

0

0.05

0.1

0.15

0.2

0.25

0.3

Cash Check Charge

LP Budget as a % of Total Retail Sales

0.550.52 0.51 0.52

0.47

0

0.1

0.2

0.3

0.4

0.5

0.6

2001

2002

2003

2004

2005

Loss Prevention Strategies

1. Integrity Screening2. Awareness Programs3. Asset Control Policies4. L.P. Systems

1. Integrity Screening

46.66%

51.35%

43.24%

68.2%

83.1%

83.8%

83.1%

42.10%

49.50%

50.50%

75.7%

79.4%

85.0%

86.0%

0% 20% 40% 60% 80% 100%

Credit Chk

Drug Test

Driving History Checks

Personal Reference Checks

Multiple Interviews

Crime Conviction Checks

Verify Past Employment

2004

2005

What’s Hot* – Integrity Screening

• Criminal Conviction Checks (27.4%)• Credit Checks (10.3%)• Honesty Tests (8.9%)• Drug Screening--laboratory (7.5%)• Mutual Protection Association (6.8%)• Driving History (6.8%)

(* % planning more utilization in the coming year)

2. Awareness Programs

58.0%

66.0%

82.0%

81.0%

90.0%

92.0%

90.0%

57.9%

66.4%

79.4%

80.4%

85.0%

87.9%

89.7%

0% 20% 40% 60% 80% 100%

Newsletters

Training Video Tapes

Code of Conduct

Periodic Programs

Bulletin Board/Posters

Hotlines

Orientation Discussion

2004

2005

What’s Hot* – Awareness Programs

• CD-ROM Interactive Training (28.8%)• Orientation Discussion (25.3%)• Training Video Tapes (24.7%)• Bulletin Board Posters (23.3%)• Web-based Communication (19.9%)• Surveys about LP issues (17.8%)

(* % planning more utilization in the coming year)

3. Asset Control

73.0%

75.0%

83.0%

82.0%

83.0%

87.0%

94.0%

75.7%

83.2%

77.6%

83.2%

79.4%

86.9%

89.7%

0% 20% 40% 60% 80% 100%

Interstore Transfers

Trash Removal

Employee Package Checks

Exception Reporting

POS Bar Coding & Scanning

Void Controls

Refund Controls

2004

2005

What’s Hot* – Asset Control

• Exception-Based Reporting (34.2%)• Refund Controls (21.2%)• Inventory Bar Coding (16.4%)• In-Store Transfer Control (15.8%)• Void Controls (15.1%)• POS Bar Coding/Scanning (13.7%)• Employee Package Checks (13.0%)

(* % planning more utilization in the coming year)

4. L.P. Systems

57.0%

62.0%

69.0%

66.0%

82.0%

83.0%

94.0%

57.9%

55.1%

66.4%

59.8%

78.5%

82.2%

95.3%

0% 20% 40% 60% 80% 100% 120%

Hidden CCTV

POS Data MiningSoftware

Armored Car

Check ScreeningSystems

Digital Video

Visible CCTV

Burglar Alarms

2004

2005

What’s Hot* – LP Systems

• Digital Video Recording Systems (39.7%)• Video Monitoring over Internet (39.7%)• Live, Visible CCTV (28.8%)• POS Data Mining Software (19.9%)• Web-Based Case Management (15.8%)• Live, Hidden CCTV (15.1%)• POS exception-based CCTV (15.1%)

(* % planning more utilization in the coming year)

Supporting Partners

Security Research Project Website

http://www.crim.ufl.edu/research/srp/srp.htmDr. Hollinger’s Email is [email protected]