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Study: Major Retailers Misperceive Shrink Bigger Problem for Competitors Than for Own Organizations; No Agreed-Upon
Shrink Measurement Method

Loss Prevention Research Council Study Sponsored by IntelliVid Also Finds Internal Theft Bigger Issue for Retailers Than External

CAMBRIDGE, Mass., July 16, 2007 - Most major retailers perceive wrongly that shrink is a bigger problem for their competitors than for their own organizations, according to a new research report by the Loss Prevention Research Council sponsored by IntelliVid.

According to the study of more than 100 major US retailers, only 10 percent characterized their shrink as high compared to their competitors, while 65.5 percent said it was average. Twenty-four and half percent said their annual shrinkage was lower than average. One reason for this misperception may be there is no agreed-upon shrink measurement method, according to the survey. While 42.9 percent of respondents said their companies measure shrink "at cost," some 57.1 percent reported their companies measure shrink "at retail price." The differences exist within and between retail segments.

According to Dr. Read Hayes, director of the Loss Prevention Research Council, "Our research indicates retailers often believe shrink isn't a serious problem for them. But, it's a major issue that retailers measure their shrink differently. They use so many different minute calculations regarding product pricing and distribution center levels. And if you compare apples to oranges, you are likely to obtain illogical results. That's why our research team strongly encourages retailers to standardize how they really measure shrink, preferably using the retail method."

In addition, the report found 86 percent of study respondents said they spend the most or second-most time working on loss problems related to internal product theft. Some 62 percent said they spend the most or second-most time working on loss problems related to internal cash theft. And 32 percent said that they spend the most or second-most time working on external theft, including organized retail crime.

"The study points to the fact that anti-shrink solution providers should continue to help retailers address external shrink threats such as organized retail crime, while assisting them in using technology to combat internal sources," said Patrick Sobalvarro, president and CEO of IntelliVid. IntelliVid is a leading provider of intelligent video analysis software for retail loss prevention. "Other studies confirm the extent of the internal theft problem, and in this regard, retailers are correctly applying resources toward internal product theft."

In addition to these findings, the 20-question study also looked at other issues, including the use of loss prevention technologies. While all respondents said their organizations have digital recording systems, just over one-fifth (21.4 percent) of these respondents say in-store personnel monitor CCTV cameras continuously. More than one-fifth (21.4 percent) of those with CCTV systems say in-store personnel rarely monitor cameras. Importantly, almost two-thirds (65.5%) of respondents think implementing new technology is very important for their companies' loss prevention endeavors.

The loss prevention survey targeted a sample of 107 major US retailers selected from mass merchants, department stores, pharmacy/drug stores, apparel, grocery and specialty stores (books, auto parts, home technology, and others). The project was conducted by the Loss Prevention Research Council under the direction of Dr. Michael J. Scicchitano, Dr. Tracy L. Johns and Dr. Read Hayes, all researchers associated with the University of Florida.

A summary copy of the 54-page report is available at no cost from:

About Loss Prevention Research Council
The Loss Prevention Research Council (LPRC) uses fact-based research to develop crime and loss control solutions that improve the performance of its members and the industry.

The LPRC was founded in 2001 by leading retailers in an effort to support the fact-based needs of the Loss Prevention industry. LPRC members include The Home Depot, Sears, Kmart, Macy's, AutoZone, Wal-mart/Sam's Club, Pep Boys, Limited, CVS, P&G and Walt Disney World. To date, the LPRC has conducted over 40 real-world loss prevention research projects for retailers. The scope of these projects includes but is not limited to:

* Providing data and testimony for legislation and legal claims
* Beta testing and refining innovative loss prevention technologies
* Developing statistical models to assist retailers in attacking shrinkage
* Comprehensive product packaging, fixture and store design research
* Researching employee dishonesty and shoplifter dynamics

About IntelliVid
IntelliVid is the leading video intelligence application provider. IntelliVid’s Video Investigator™ software unleashes the full profit potential of video surveillance systems, transforming them into proactive asset protection, risk prevention and customer intelligence solutions. Its patented technology platform empowers the rapid and accurate tracking of people and assets across time and space, delivering first of its kind rapid video analysis and chain of custody evidence. Video Investigator™ can also provide unprecedented merchandising and operational insight into customer shopping behavior by rapidly analyzing and understanding traffic patterns, people counting, linger times and conversion rates.

Headquartered in Cambridge, Massachusetts, IntelliVid is backed by leading venture investors DFJ New England, Egan-Managed Capital, Flagship Ventures and Intel Capital. IntelliVid’s Video InvestigatorTM is the first video intelligence application to gain real traction in the retail market with installs at many of the leading Fortune 500 retail companies.

All companies and products listed herein are trademarks or registered trademarks of their respective holders.

George Cohen
George Cohen Communications
(617) 325-0011

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