Even as global retail theft has shown a 5.5 per cent decline from the previous year, India has topped the list in the ‘retail shrinkage’ rate. This has come out in a study, sponsored by Checkpoint Systems, which monitored the cost of shrinkage (loss from shoplifting, employee crimes and administrative errors) in the global retail industry between July 2009 and June 2010.
According to the fourth annual edition of the Global Retail Theft Barometer, global retail theft totalled €87.506 million in 2010, representing a 5.6 per cent decrease from the previous year. Shrink cost retailers $107.3 billion during the study period, representing 1.36 per cent of global retail sales. This is down from 1.43 per cent the previous year. The country with the highest rates of shrinkage as a percentage of sales was India – 2.72 per cent of retail sales. The lowest shrinkage rate was found in Taiwan (0.87 per cent), while in Europe the rate stood at 1.27 per cent.
According to the report, shrinkage decreased in all regions surveyed. The biggest decrease was in North America. “Even with the shrinkage decrease, retail crimes cost the average family in the 42 countries surveyed an extra €152 on their shopping bill,” said Professor Joshua Bamfield, director, the Centre for Retail Research and author of the study.
The 2010 study also found that retailers increased their spending on loss prevention and security by 9.7 per cent over 2009, to €21.859 million globally.
“The correlation between increased security spending and a global 5.6 per cent decrease in theft is very significant,” said Bamfield. “It highlights the importance of continued advancement and improvement of loss prevention programmes, as reducing theft is key to the success and growth of retailers’ businesses.”
“In 2008, at the start of the economic downturn, the temptation for retailers was to reduce their loss prevention spending,” commented Rob van der Merwe, chairman, president and chief executive officer, Checkpoint Systems. “This typically leads to an increase in shrink and that is what we saw with the 2009 Theft Barometer study. Retailers quickly realised the need to correct this trend and began to invest in smart deployments that could be quickly implemented with high ROIs, such as increased protection of high-theft merchandise, and more employee training and store audits. This resulted in a short-term win and a decrease in shrink,” he added.
According to the report, the high shrink-prone verticals in the Asia-Pacific region, including India, are apparel/clothing and fashion/accessories (1.72 per cent); and cosmetics/perfume/beauty supply/ pharmacy (1.7 per cent).
Customer theft, including shoplifting and modern retail crime, caused the greatest shrink loss in most countries at 42.4 per cent of shrink, followed by employee theft at 35.3 per cent.
“Although retailers have made considerable progress in introducing new anti-shrink policies, more than 25 per cent of the retail ‘top fifty’ most-stolen product lines still have no specific protection,” said van der Merwe. “So our industry needs to accelerate innovation to help better protect retailers and consumers.”
– IndiaRetailing Bureau