New Study Finds U.s. Retailers Losing $32 Billion to Theft

Dec. 20, 2001
Losses from employee theft reach record levels

BOCA RATON, Florida - November 23, 2001 - With retailers already in the midst of one of the most challenging sales climates in years, a new retail study reports that inventory theft could further erode retail profits, especially during the critical holiday shopping season.

Inventory "shrinkage," a combination of employee theft, shoplifting, vendor fraud and administrative error cost the nation's retailers $32.3 billion last year, according to the recently released National Retail Security Survey, which analyzed theft incidents from 116 of the largest U.S. retail chains. The annual survey was conducted by the University of Florida with a funding grant from ADT Security Services, Inc., a unit of Tyco Fire and Security Services (NYSE: TYC; LSE: TYI; BSX: TYC).

UF criminologist Richard C. Hollinger, Ph.D., who directs the National Retail Security Survey, said results indicate that in 2000, retailers lost 1.75 percent of their total annual sales to these problems, up from 1.69 percent last year.
"Given that the surveyed portion of the retail economy annually transacts over $1.845 trillion dollars, this percentage of loss is worth over $32 billion," Hollinger said. "This means that the single largest category of larceny in the United States is the crime that occurs in retail stores. This figure is larger than motor vehicle theft, bank robbery or household burglary combined."

According to the study, retail security managers attributed more than 46 percent of their losses to the thefts of disgruntled workers. In comparison, 31 percent of retail losses were the result of shoplifters. The remainder of annual retail losses are due to paperwork errors (17.6 percent) and theft by vendors (5.8 percent). Translated into U.S. dollars, retail employee theft costs retailers $14.9 billion annually, while shoplifting costs $10 billion.

"With the uncertainty in consumer confidence and warnings of a slow shopping season, retailers need to look beyond the selling floor to increase and protect their profits," said Mike Snyder, president of ADT Security Services. "Technologies such as anti-shoplifting systems, digital video surveillance and point of sale monitoring solutions, tied together with remote and central station monitoring, will help retailers contain some of these losses without sacrificing good customer service."

According to Hollinger, results of the survey should serve as a wake-up call to the retail industry that shrinkage continues to be a significant source of revenue loss amounting to billions of dollars.

"In today's environment of heightened awareness about increased security measures it's becoming increasingly important for retailers to address the security lapses that allow these kinds of losses. In the end, it is the consumers who will have to pay the price for shrinkage in the form of higher retail prices." Hollinger concluded.

Celebrating its 127th anniversary, ADT Security Services, Inc., a unit of Tyco Fire and Security Services, is the largest single provider of electronic security services to five million commercial, federal and residential customers throughout North America and Europe. ADT's total security solutions include intrusion, fire protection, closed circuit television, access control and critical conditioning monitoring and integrated systems. ADT's website address is

Tyco Fire and Security Services is one of the major businesses of Tyco International Ltd. Tyco Fire and Security Services designs, manufactures, installs and services electronic security systems, fire protection, detection and suppression systems, sprinklers and fire extinguishers. Tyco Fire and Security Services includes more than 60 brands, which are distributed in markets across the globe.

Tyco International Ltd. (NYSE: TYC, LSE: TYI, BSX: TYC) is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services; and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in disposable medical products, financing and leasing capital, plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2001 revenues in excess of $36 billion.

For more information about the National Retail Security Survey, please contact Associate Professor of Sociology and the Center for Studies in Criminology and Law at the University of Florida, Richard C. Hollinger, Ph. D., at (352) 335-0715 or (352) 371-6263. For more information about ADT Security Services, Inc., contact Ann Lindstrom at (561) 988-3258 and for information about Tyco International contact Maryanne Kane at (508) 747-0800.

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