Roughly half the losses come from customers pocketing goods without paying, the other half from dishonest company insiders.
The amount of theft is so great that were every German household to start shoplifting, each one would be able to nick €50 worth of goods per year, the report said.
Due to the recession, the institute says shoplifting has increased six percent in 2009 compared to last year.
Some of the most shoplifted articles include disposable razors, batteries, tobacco products and condoms. Among the apparel items most frequently stolen are lingerie and name-brand clothes.
The theft also costs the German government €400 million a year in lost sales taxes, concluded the report.
In addition to the losses, the industry spends over €1 billion each year monitoring inventory and protecting against theft.