Report: Retailers will lose $50 per person in shrink this holiday season

The retail loss burden overall is expected to be $132 per person this year.

 

However, $50 of this loss — about twice as much as in other calendar quarters — is expected to be incurred in this holiday season, according to “The 2016 Retail Holiday Season Global Forecast” from Checkpoint Systems. The report provides an analytical view of business risks that major retailers face during this holiday season. 

 

Strains on profitability manifest during the holiday season largely because of increased shrink and theft from internal sources — primarily via employee theft and other sales reducing activities (SRAs) — and external factors (primarily via shoplifting and organized retail crime). These loss increases place an enormous burden on retailers and, ultimately, on honest consumers who pay for it in higher prices.

 

“Despite more than one-third of the year’s retail sales expected to be registered in just these three months [of the holiday season], more than 40% of SRAs are also incurred in this same time period,” said Ernie Deyle, an independent retail loss prevention analyst. “This leads to increased shrink, and puts additional strains on brick-and-mortar retailers already reeling from an ongoing inhospitable retail market.”

 

As expected, inventory — including the space to store it — is the largest single cost of doing business, the report said. While reducing inventory means lower costs, insufficient inventory leads to out of stocks, lost sales and unhappy customers. So balancing these two factors is critical to profitability and growth, particularly in omnichannel environments.

 

As a result, more companies are aligning and using advanced data analytic tools, inventory management strategies, and sophisticated technologies, such as RFID, to gain the advanced visibility needed to track merchandise as it moves throughout the supply chain to distribution centers, retail backrooms and store shelves. This increases the overall value proposition specific to item, category and department financial contributions.