Cost and Robbers
Shoplifting and Employee Thievery Add Dollars to Price Tags
By Margaret Pressler
Washington Post Staff Writer
Sunday, February 16, 2003; Page H05
I have never been able to shake the image of the guy next to me at the Hecht's department
store downtown who grabbed a whole rack of belts and rushed out the door. It was a
weekday, at lunchtime, and the store was crowded.
Ever since witnessing that boldest of thefts, I have had a nagging question about how
much people like him are costing companies like Hecht's and consumers like me.
The answer is a heck of a lot, both in tangible and intangible ways.
In the parlance of the retail industry, the shoplifting I witnessed was a classic case of
"shrink." Retailers use the term shrink, or shrinkage, to encompass a whole range of
losses, including shoplifting, theft by employees and plain old clerical errors. In 2001,
total shrinkage was $33.2 billion, more than the total gross domestic product of Bolivia,
Yugoslavia or Zimbabwe.
I always assumed that the bulk of losses in retail came from stealing by shoppers. In fact,
the biggest factor is employee theft. Of those billions of dollars lost by stores, according
to the National Retail Federation, 46 percent was the result of employees helping
themselves to merchandise and cash. Another 31 percent was lost to shoplifting.
Paperwork mistakes, such as errors in the shipping and receiving department, accounted
for 17 percent of all shrink, and the remainder was due to vendor fraud.
"Shoplifting is prevalent, but internal theft is much more easily done," said John Riccio,