I worked at a K-Mart which kept track of shrinkage. Ours was $200,000.
A month…
On sales of only $2 mil !
An employee I knew a little bit was arrested, although whether she was charged was never clear, for pocketing drawer money. Of course, she was the 17-y. o. high school dropout with a baby, so her ability to make wise choices was already in doubt.
Where did they get these figures from? Obviously when items are missing the store isn’t always going to know where they went to. How do they guess if it was stolen by an employee, stolen by a customer, or just bad inventory records? I’m guessing their estimates are based on the percentages from when they do determine a cause but those figures can be biased. If they break up an employee theft ring, they be able to account for hundreds of missing items in one shot. But when they catch a shoplifter, it’s more likely to be only a few items. And they may never be able to conclusively prove that an item never actually existed but just appeared to because of bad records. My point is that employee theft might be over-represented.
Wiki cited an older (2001) University of Florida study. shrug
I assume those academia-nuts knew what they were doing when they did the study.
I know at our Walmart they closed the self-checkouts and when I asked why they said too much shoplifting
Actually I’ve audited companies and we base the shrinkage on when we catch them. Usually when theft is suspected we will monitor it. And see how much and what is being taken, then we document the items taken over a period.
Usually once we go “in for the kill” usually, we then prosecute criminally and then sue also in civil court and attach anything we can as well as future wages and such.
A friend of my son’s started dumpster diving behind a local (to him) supermarket after losing his job. He nearly always found still-packaged - and often just outdated - steaks, roasts, etc. (and I agree, that’s a good thing; I don’t want to buy outdated meat, but many people will, if it’s marked down, but … read on).
One time, though, he found several (forgotten the number, but the above hypothesized barbecue made me think of it) large pieces of meat - sirloin roasts, I think - in a bag, in the same dumpster. Obviously, some employee had put them there to retrieve after work. Could be the same person who trashed the just outdated meat, rather than doing a mark-down.
One source of store loss not yet mentioned that I have direct experience of is fraud. I take a certain branded OTC capsule which happens to be the only source of “no sodium” formulation. Once I bought a package at Walmart, took it home, opened it, and discovered that someone had substituted a smaller bottle filled with something of approximately equal weight to the proper contents. I took it back and explained what happened.
Very fortunately for me, given that it is nearly a $20 item, not covered by medical insurance of any kind, and me on Social Security, the store refunded my money. I may not have the highest opinion of Walmart in many ways, but their policies on things like this are one reason why I persist in shopping there.
And I’m sure that many of us have known people who returned items after damaging the stuff themselves - and managed to exchange it for a new item, or get their money back because they’d used it and didn’t need it any more (like a woman with little girl in tow I saw last year right after Halloween who was standing there with the obvious intent of returning a princess-type costume that I could clearly see had been worn). I wasn’t interested enough to hang around to see what happened, though.
I don’t care how much you spent, or how little you can afford it. If you buy something and use it, you ought to have the decency to stick to your bargain. I dunno how much my attitude is influenced by the fact that most people in my family are, or have been, independent businesspeople, but the fact remains: That’s dishonest.
I might grumble about how much I pay for the medication I mentioned above, but I need it, I use it, and there are no other options, so it’s a necessary item in my budget. I cannot understand the mentality of anyone who would defraud. I was deeply amused by the coup my son’s friend achieved with the huge cache of meat from the dumpster, but I was still appalled at the thievery of the employee who put it there.
Some figures from this 2006 story from Business Wire: “The dollar losses are staggering as the average shoplifting case value ($126.87) jumped an amazing 21.5% over 2004, while the average dishonest employee case value ($724.15) increased 5.72% over the prior year.”
Damage goods aren’t considered shrinkage. According to the National Retail Federation, about 47 percent of the dollars lost came from employee theft, while shoplifting accounted for about 32 percent. Administrative errors account for 14 percent, while supplier fraud accounts for 4 percent. The remaining 3 percent is unaccounted for.
To the OP’s question… WalMart reports shrinkage of $3 billion a year on about $350 billion in sales. With around 4000 stores in the US (including Sam’s Club), that works out to $750,000 in shrinkage per store, roughly $250,000 due to shoplifting. And that’s against average sales of $8.5 million per store. And based on the average amount per shoplifting incident, that works out to about 2000 incidents in a store each year, or 5.4 per day.
Says who? Shrink is the difference of what you buy and what you sell, minus what you inventory. If you bought it, and you didnt sell it or inventory it, its shrink.
Ordered too many watermelons to sell and had to throw it out? Thats shrink.
A customer was trying on a new pair of pants and ripped them down the middle? Thats shrink.
Had an employee accidentally knock over a display of wine bottles? Thats shirnk.
Just to add a non-US perspective, the store(s) I worked in had an extremely low rate of Employee Theft-based shrinkage (and it was almost exclusively confined to things like batteries that cost next to nothing, were allocated for store use in demo products, and people just helped themselves when their MP3 player or remote needed a new battery). Being in a smaller environment (5-12 staff) helped a lot, but I also think that the higher Minimum Wage here in Australia helps too, as well as hiring decent staff in the first palce.
The thing was, when an employee wanted to do the wrong thing with regards to stock, it was usually Really Expensive But Difficult To Trace Stuff that vanished- iPods, DVD Recorders, Mobile Phones, Wireless Modems, even the odd Laptop. The stores in the Northern Territory were, for some reason, particularly prone to shrinkage, both customer and staff based, I remember a Senior Loss Prevention Manager telling me at a work function once.
Loss Prevention kept very close tabs on things and worked closely with store managers to make sure that “high value” stock was being properly accounted for; it was generally kept locked in cabinets that only a limited number of people had access too.
Employee carelessness was a bigger cause of Shrinkage; not locking the iPod or Mobile Phone display cabinet after showing products to customers, or leaving expensive stuff on the counter instead of putting it away, or just not keeping an eye on who had that Digital Camera that was out of the cabinet accounted for a lot of missing Expensive Stuff.
A surprising amount of shrinkage was due to what we called “The Twilight Zone Factor”- shit that just disappeared because it had been in the storeroom for ages, someone moved it somewhere else in the storeroom, no-one could find it, and then it simply vanished or got accidentally thrown out during a clean-up.
You’d also have functional products accidentally thrown in the “Beyond Economical Repair- To Be Destroyed And Thrown Out” pile (that were destroyed and thrown out, and this was checked by three staff just to make sure there was nothing suss going on), you’d have Stock Repairs that never got to the repairer (or never came back), and all sorts of similar things in which there was no dishonesty involved, but the stock had simply vanished off the face of the earth, despite inventory insisting it was in the store. Other people who’ve worked retail will know what I’m talking about.
Shrink is typically untraceable losses. shoplifting and bad paperwork result in shrink numbers as a history of what actually happened to the product can not be established. Damages recorded correctly are marked out of the inventory.
What he said.
Shrink is typically not realized until a physical inventory of the store is taken.
Damaged goods are normally kept track of throught the year and are written off as a loss elsewhere.
Our shrink numbers (BestBuy) were typically broken down as 20% customer theft, 20% record errors, 60% employee theft.
The “60%” number didn’t necessarily mean that a lot of your employees were stealing, but it did show that the ones who did stole big time.
I fired/charged one employee who was doing fraudulent returns (would return a $199 printer for cash and pocket the money even though no printer was present. Looked suspicious when it said I had (25) M50 printers on hand when we had none, found 25 return transaction for cash, all done by the same guy.) That $5K from one guy and who knows what else he took.
Had another new manager who closed the store by herself, opened the back door, and handed 10 brand new laptops to her boyfriend waiting outside in his car. Thousands.
Another computer repair tech who would open brand new PCs, write up a customer repair tag (for a friend), stick it to the unit and have their friend pick it up like it was in for repair. Thousands.
A dirty loss prevention guy (yellow shirt at front door) who would let his friends cart stuff right past him. Again thousands.
The list goes on and on. The teen customer taking $30 worth of cds was chicken scratch compared to them.
Shrinkage also happens when you swim in the ocean.
My point was that in compiling the data, that particular study did not include damaged product in determining the percentage of shrinkage attributable to each type of loss.
A friend who owns a small cash only fast food place had to fire an employee once due to fairly obvious, though difficult to prove, theft.
There was no register, only a till, so it wasn’t a matter of checking the paper tape. Instead, he could inventory x number units had been sold at y price, so there should be a minimum of x*y in the till, not counting sales of any side dishes. When the inventory count indicated day’s sales should be $300, but there was only $50 in the till, it was hard to not draw certain conclusions.
He fired her but did not try to prosecute as 1–it would be difficult to prove that she was stealing vs bad at math and 2–she was a black female and he was a white male, in Oakland, Ca, so all kinds of politics, good luck.
interesting. So what percentage of people are criminals?
Does anybody have statistics for the number of people who walk through the door of Walmart every day?
So far no one has mentioned theft/resale rings which I thought were pretty serious (or maybe it’s just here in California?). Apparently big supermarkets/Walmarts are the targets, and each person in the group that enters a store will have a list of items to acquire, usually bulk items that can turn over quickly at a flea market, such as diapers, socks, etc.
In six years as a prosecutor, I saw dozens of customer shoplifting cases, but only two cases in which an employee was the thief, FWIW.
a friend who manages a contact providing store detectives says they think they are catching perhaps 10% of shoplifters. They could catch more if the stores were willing to spend more on detectives - but they aren’t. About 7 out of 10 will offer violence when apprehended now - used to be about 2 in 10. All the detectives were bought stab vests, and they all wear them.
To be honest I think about this every time I open that irritating, hard to get into, packaging that all electronics and such has on it nowadays (I assume is there to stop shoplifters removing the packaging in the store). Is it really a good idea to use an anti-shoplifting device that requires shoplifters to carry sharp knives to circumvent (that is how I usually have to get into the damn stuff at home).
I worked in a Target and it was always a battle between catching shoplifters and Target wanting to cut back hours for the AP (Asset Protection) agents, who are the ones who work undercover in the stores to take down shoplifters. It was a battle of which one would result in the least amount of loss. Of course during the holidays they were there all the time, but there would be (slow) times when no one was working AP and you could take off with the entire store if you really wanted.
Later on I worked for a wine distributor and one of the Walmarts that was on my route was one of the busiest locations in Texas, and as you can imagine, they had quite a bit of theft going on in that location. The takedowns were always very interesting and fun to watch. Then again, they had some very large and intimidating gangster-looking agents working and taking down shoplifters… Of course this location wasn’t in the best part of town, and one day they found a dead body in the trunk of a car in the parking lot.
What’s a dead body get you at a flea market nowadays?