Retailers are facing a $62 billion problem that has nothing to do with the pandemic

• Theft and fraud cost retailers $62 billion in 2019, up from $51 billion the previous year, according to a National Retail Federation survey.
• These losses — which retailers refer to as shrink — represented about 1.6% of sales last year, up from 1.4% the previous year.
• The retailers surveyed said they are seeing a higher number of theft cases by employees and shoplifters.

Retail theft is surging to record highs, despite an expanded use of new technologies designed to catch thieves, according to a new survey.

Retailers' losses due to theft, fraud, and other causes totaled nearly $62 billion in 2019, up from nearly $51 billion the previous year, said the survey, which was conducted by the National Retail Federation and the retail consulting firm Appriss Retail.

On average, these losses — which retailers refer to as shrink — represented about 1.6% of sales last year, up from 1.4% the previous year.

For a company the size of Walmart, which generated more than $514 billion in revenue last year, a 1.6% shrink rate would translate into more than $8 billion in losses. Walmart does not publicly disclose its losses due to shrink.

"Between an increase in incidents and new ways to steal, shrink is at an all-time high," said Mark Mathews, NRF vice president for research development and industry analysis. "Loss prevention experts are facing unprecedented challenges from individual shoplifters to organized gangs to highly skilled cybercriminals."

The survey polled a total of 69 retailers with sales volumes ranging from less than $99 million to more than $50 billion. About a dozen of the survey participants were large chains with more than 2,000 stores.

Retailers are seeing more cases of employee theft and shoplifting, survey finds

Shrink has been driven higher, in part, by an increase in theft by employees and shoplifters, according to the survey.

The retailers surveyed reported an average of 560 employee theft apprehensions in 2019, up from 323 the previous year, and 689 shoplifting apprehensions, up from 509 the year before.

The average robbery netted about $830 in losses last year, the survey found.

Another source of losses is fraud, which can include the use of stolen credit cards, gift card scams, and the return of stolen merchandise for refunds.

Many retailers are trying to address rising cases of theft and fraud by using technology, such as artificially intelligent video systems, to identify potential problems.

Most of the retailers surveyed use burglar alarms, digital video recorders, and live customer-visible CCTV to combat losses. About 57% of survey respondents said they use point-of-sale analytics systems to combat shrink and 16% said they use video analytics.