Retailers also claim that organised crime gangs are targeting expensive items and have driven up the cost of the average theft by nearly two-thirds.
The British Retail Consortium's (BRC) annual crime survey found that among 30 retailers, who represent 51% of the retail sector by turnover, there were 631,391 incidents of customer theft in 2012-13, the highest level recorded in the survey for nine years.
Only 9% of these crimes were reported to police, a drop from 12% the previous year, in what the BRC suggests shows a lack of faith in law enforcement.
The report said: "This is an indication of the lack of confidence businesses have in the police response to customer theft and the perception that it is often perceived as a 'victimless' crime and as a result not taken seriously."
The companies surveyed estimated that around a quarter of customer thefts were never detected.
Figures also showed that the average value per theft had increased to £177, a 62% rise on the previous year and again the highest figure for nine years.
Helen Dickinson, director-general of the British Retail Consortium, said: "Theft from stores pushed the direct cost of retail crime up to £511 million last year, 166% higher than five years ago.
"Far from being victimless, we all pay for this increased stealing through higher prices and, increasingly, shop closures."
The survey team wants to see a single definition of "business crime".