Inventory discrepancies in the German retail sector as a whole add up to four billion euros annually, EHI observes in its current survey. Dishonest customers account for slightly less than 1.9 billion euros of the amount; retailers’ employees are blamed for losses of around one billion euros. Statistically, each year each German household continues to steal goods valued at over 50 euros from retailers. To visualise, this means that about every 200th shopping trolley passes the checkout without being paid for. The state loses around 400 million euros in VAT revenues annually as a result.
Protecting merchandise costs dearly
To reduce so-called inventory losses, annually the retail industry invests an average of almost 0.3 per cent of its sales revenues, or around one billion euros. The cost of inventory discrepancies and their avoidance thus amounts to about five billion euros annually, which retailers have to include in their selling prices, like all other costs. Retailers continue to estimate the general crime threat as medium to high, with a rising tendency because companies anticipate an increase in crime in almost all areas next year.
‘Organised’ shoplifting is considered the biggest problem by chain store operators. In general, however, ‘ordinary’ customer theft is still the main problem. The further intensification of preventive measures will, therefore, be necessary.
No easing in sight
According to the official crime statistics of the German police for 2007, the number of cases of simple shoplifting reported to the authorities declined another 6.6 per cent from 428,553 to now 400,183. But retail’s assessment of the current crime situation and the unchanged, high level of inventory losses indicate that there has been no easing of the situation on the shoplifting and theft front. Longer business hours, reduced staffing, reduced presence of detectives during retail opening hours are conducive to undiscovered shoplifting. An estimated 30 million cases of shoplifting involving goods worth an average 60 euros go undetected and unreported every year. Comparing 2007 with 2006, the inventory discrepancies in German retailing as a whole, averaging all sectors, remained on a constant level. An average inventory discrepancy of easily one per cent — valued at selling prices and placed in relation to gross sales — continues to reduce profit margins in retailing significantly.
Efficient theft prevention
The current offence rates substantiate the importance and necessity of the use of detectives and camera surveillance in the retail sector. At companies which employ detectives, even if only at selected outlets or only on a part-time basis, 71 per cent of all customer offences exposed are detected and reported by detectives. Although most companies do not have cameras throughout their stores, slightly less than 40 per cent of the offences discovered are discovered with the help of camera systems and image recording.
Taking part in the latest EHI study on the topic of inventory discrepancies were 122 companies with more than 12,000 outlets in all, representing estimated total sales of around 47 billion euros. The study was supported by HDE, the German Central Retail Association.