The retail sector is Ireland’s most important industry and largest private sector employer. The sector’s contributions globally by way of employment, revenue and contribution to the GDP, indicate that retail is of vital importance to the worldwide economy.
The Irish retail sector has experienced significant changes in recent years. The global economic crisis, Irish banking crisis and recession have had a significant and lasting impact on retail operations, resulting in the closure of many well-known brands. Furthermore, as consumers continue to shop online, Irish retailers face significant competition from international retailers. In effect, retailers are now faced with numerous challenges in an increasingly competitive and complex environment.
Increasingly, business owners are seeking to increase competitiveness and protect the profit streams into the organisation by implementing strategies to reduce their operating costs. One such strategy is the management of loss which has a substantial impact on a retailer’s profitability and subsequent competitiveness.
Encompassing unexpected or unplanned shortages in cash, stock or company assets; retail loss can be attributed to several causes including shoplifting, employee/internal theft, administrative and paperwork errors, and vendor fraud. Loss can occur across the various functions and levels of the retail organisation including at the retail store, the supply chain, at corporate level and across the e-commerce platform. Currently, despite the scale and enormity of the problem and the existing opportunity to enhance profitability, there is disparity and inconsistency in how retail loss is conceptualized, resourced and managed.
Previous research aimed at quantifying the global retail loss problem has identified that the largest proportion of loss can be attributed to reasons that are internal to the organisation. Therefore, the intrinsic nature of this type of loss affords an opportunity for retailers to effectively manage and consequently minimise the problem.
The purpose of this paper is to review literature in relation to internal loss at the retail store, providing an overview of how this type of loss occurs thus identifying opportunities for future research.
The salient causes of loss are identified to be internal theft of stock or cash, wastage as a result of missed returns, damages or out-dated product; cash loss and loss due to administration or process error. The identified loss typologies are discussed in line with literature including previous research, thus presenting an agenda for future studies.
This paper contributes to existing theory and practice by presenting discussion on loss that is caused solely by internal causes. The internal nature of this type of loss dictates that it is within the boundaries of control for the organisation. The contents are therefore of value to the academic community and the retail practitioner community. Findings are of benefit as they present an opportunity for Irish retailers to enhance profitability and competitiveness with loss management strategies.
