With the retail market in India growing at the rate of knots, the risk of retail shrinkage is also speeding up.
In a recent survey by Checkpoint Systems Inc., a US-based manufacturer and marketer of technology-driven integrated solutions for retailers, India has topped the list among Asia-Pacific countries having the highest shrinkage rate.
According to the official statistics of the company, India has registered a shrinkage rate of 2.90 per cent, the highest in the Asia-Pacific region.
In India, the survey found that 62.3 per cent of shrinkage was caused by employee theft. The highest proportion of internal theft by cash, coupons and vouchers in India listed 38.7 per cent. Administrative error alone was responsible for 22 per cent of shrinkage in the country.
The highest rates of shrinkage were seen in the retail of vehicle parts, hardware, and building materials, recording 1.80 per cent. Apparel, clothing and fashion accessories listed 1.69 per cent of shrinkage. The lowest rates were found in footwear and sports accessories, with 0.68 per cent. Liquor, wine and beer market recorded shrinkage of 0.84 per cent.
Across the Asia-Pacific region, retailers found that the largest source of loss were the customer thieves, responsible for 52.6 per cent of shrinkage. The total amount stolen by customer thieves, or shoplifters, was $8,031 million.
The survey studied all retail sectors and vertical markets in India, Australia, Japan, Singapore, and Thailand, including 103 large retail businesses in these countries. The study included 16,230 retail stores with combined retail sales of $65,418 million, equivalent to six per cent of retail sales in these five countries.
Shrinkage losses are caused mainly by people (customers, employees) stealing goods or money from the company and also by a range of small or large process errors, accounting lapses and pricing mistakes that produce apparent inventory losses.