SOURCE: Aberdeen Group, a Harte-Hanks Company

January 09, 2008 10:00 ET

High Shrink Takes a Toll on the Bottomline of Retail Enterprises

Internal Theft, Transaction Fraud and Organized Retail Crime Are Formidable Challenges

BOSTON, MA--(Marketwire - January 9, 2008) - Aberdeen, a Harte-Hanks Company (NYSE: HHS), surveyed 680 retail enterprises in October 2007 and found that on an average, 60% of retailers surveyed recorded year-over-year shrink or write-off of at least 1.75% of their total inventory (as a percent of sales), further compounding existing theft and fraud-related complexities in retail.

Another alarming trend is that almost a third of retailers (30%) have reported between 2% to 6% invalid transactions (unauthorized and fraudulent customer transactions as a percentage of total transactions). This indicates that retailers may be faced with high transaction fraud incidence due to organized retail crime, data loss, and dishonest employees.

Aberdeen data shows that low levels of loss prevention training coupled with the incidence of internal theft generate extreme pressure for individual field locations. "Effective loss prevention is hampered by high number of internal cases related to merchandise, cash-related, and transaction fraud committed by employees," said Sahir Anand, Retail analyst and chief author of the report "Real-Time Loss Prevention: Changing the Game in Fraud."

"Eighty percent of internal theft incidents go un-noticed or un-resolved adding to daily shrink in stores. Moreover, retailers also tackle other problems propagated by internal theft such as legal costs to settle loss prevention cases, labor turnover, and hidden costs related to lost sales opportunity, negative impact on customer service, and low employee morale," says Anand. Despite the challenges, Aberdeen data also indicates that the road to recovery is attainable if a centralized approach to data, compliance, and training is pursued by retailers. Cash asset protection, real-time video and transaction data intelligence, and access control are some of the pillars that enable retailers across different sub-segments to build an agile and responsive loss prevention environment.

A complimentary copy of this report is made available due in part by the following underwriters: Micros Retail and IntelliVid, and supported by RILA and LP Magazine.

To obtain a complimentary copy of the report, visit:

About Aberdeen Group, a Harte-Hanks Company

Aberdeen is a leading provider of fact-based research and market intelligence that delivers demonstrable results. Having benchmarked more than 30,000 companies in the past two years, Aberdeen is uniquely positioned to educate users to action: driving market awareness, creating demand, enabling sales, and delivering meaningful return-on-investment analysis. As the trusted advisor to the global technology markets, corporations turn to Aberdeen™ for insights that drive decisions.

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