For many home improvement retailers, organized retail crime is becoming a costly problem, a new report from CNBC says. Retailers like Home Depot are now spending more to deter theft and are also working with local law enforcement to prosecute involved parties.
Recent data from the National Retail Federation finds that for every $1 billion in sales in 2018, organized crime theft cost retailers nearly $778,000. What’s more, nearly three out of every four retailers noticed an increase in retail shrink over the previous year.
Theft is one part of retail shrinkage. Other contributions can include “loss due to defective or damaged merchandise, vendor fraud, administrative errors, employee theft or shoplifting.” It can also include organized crime.
During the first three quarters of 2019, Home Depot says retail shrink has impeded its overall sales.
“There’s been pressure to our margin from shrink, which was the highest contributor to the decrease year over year,” says CFO Richard McPhail.
Home Depot executives say they first noticed an increase in high-value theft around May, but would not say how much it has specifically lost due to organized retail crime.
Most businesses plan for a certain amount of retail shrink, but once it surpasses their estimation, it begins to hurt overall sales and harm other customers, the article states.
“We have been very good about not raising prices as a result of our shrink equation,” says Scott Glenn, Home Depot vice president of asset protection. “But if [shrink] gets to a point where we cannot continue to do business this way, ultimately, we will have to pass it along.”
For more insight into how Home Depot is collaborating with law enforcement and others to stop retail theft, check out the full article on CNBC. To prevent theft at your own operation, check out these loss prevention tips to share with your staff.