IHL Group and Sensormatic’s 2026 total retail loss study finds 75% of loss dollars come from somewhere other than external theft. Here’s where to look.
If your loss prevention program is built almost entirely around stopping shoplifters at the door, a major new study says you’re guarding a quarter of the problem. IHL Group and Sensormatic Solutions’ Beyond Shrink: 2026 Global Total Retail Loss Study — based on input from 915 retail decision-makers, weighted by company revenue — found that external theft, including organized retail crime, is the largest single source of loss at 25%. The other 75% of loss dollars come from elsewhere in the business.
That is not a reason to relax on theft. Every loss vector the study tracked is rising, with more than half of retailers (54%) reporting an increase in each area. It is a reason to widen the map your team works from.
Start with returns. Return fraud increased for 68% of retailers — nearly matching the 69% who reported increased shoplifting — yet retailers rank fraud prevention only fifth out of seven loss-related performance measures. That gap between exposure and priority is exactly the kind of blind spot LP leaders are paid to close. If your return desk still runs on loose receipt checks and manager overrides with no audit trail, you already know where to begin.
Next, look at the supply chain. Supplier fraud, warehouse and sales-area shrink, and goods-receiving loss together account for 33% of retailers’ total losses. That is a bigger slice than external theft, and it lives in areas LP teams often treat as someone else’s department. Receiving-dock discipline — counting before signing, separating receiver and checker duties, auditing high-shrink SKUs on arrival — is loss prevention work, full stop.
Then there is the quietest drain of all: process error. Administrative process errors cost retailers an average of $103.40 per incident, nearly matching the $107.00 average cost of employee theft. In other words, honest mistakes are costing almost as much as dishonesty. Tightening receiving paperwork, price-change procedures, and markdown controls is unglamorous work, but the numbers say it pays like an investigation program.
Two more findings deserve a place in your next budget conversation. First, scale changes exposure: external theft and ORC account for 26% of total loss at retailers over $1 billion in revenue, but only 17% at retailers under $250 million — so smaller operators should be even more skeptical of a theft-only loss strategy. Second, investment tracks with outcomes: the average LP budget in the study is about 1.2% of sales, and retailers spending above 2% were the only group reporting more declines than increases across loss vectors.
Finally, the study links traffic awareness to better results. Retailers that align staffing and monitoring to traffic patterns report better loss outcomes, with 91% citing peak traffic periods and 89% citing event-driven crowd surges as key drivers of loss. Staffing to the clock instead of to the crowd is leaving money on the table.
The takeaway is not that theft doesn’t matter — it does, and it is growing globally. The takeaway is that a loss prevention program measured only by apprehensions and recoveries is measuring a quarter of its job. Audit the other three quarters: returns, supply chain, and process. That is where the rest of your shrink is hiding.
Source: IHL Group and Sensormatic Solutions, “Beyond Shrink: 2026 Global Total Retail Loss Study,” announced October 22, 2026.
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