Global Retail Theft on the Rise, Especially for Cheese

Losses from shoplifting, employee or supplier fraud, organized retail crime and administrative errors (also known as "shrink") increased last year, rising to their highest levels since Checkpoint Systems, Inc. began tracking global retail theft in 2007.

Overall, Checkpoint Systems found that shrink in 2011 cost the retail industry 1.45 percent of sales which translates into a whopping $119 billion.

Here are a few more highlights from this year's Global Retail Theft Barometer:

Customer theft, including shoplifting and organized retail crime, was up 13.4 percent and was the primary cause of shrink in most countries, costing retailers $51.5 billion (43.2 percent of total shrink).

Cost of theft to US shoppers averages $435 per family.

Among the highest shrink items was cheese (3.09 percent). Shrink for health and beauty items such as mascara, eye liner and eye shadow increased globally by 30 percent to 2.14 percent and outerwear shrink increased by 15.3 percent to 2.94 percent. Meanwhile, footwear shrink increased by 1 percent to 0.99 percent globally.

Shrink rates vary according to business type. Checkpoint Systems found the highest average shrink rates in apparel/clothing and fashion/accessories (1.87 percent), followed by cosmetics/perfume/health & beauty/pharmacy (1.79 percent). Among the highest shrink items was cheese (3.09 percent).

Dishonest employees were responsible for $41.65 billion or 35 percent of shrink. (Interestingly, though, unlike in Europe and Asia, employee theft in North America and Latin America surpassed shoplifting, and was responsible for 44.1 percent of shrink in North America and 42.6 percent in Latin America. In addition, the average amount admitted stolen by employees was more than eight times the average stolen by shoplifters.)

Nearly half (47.8 percent) of US retailers report increased losses from organized retail crime.

The highest rate of shrink occurred in India (2.38 percent of retail sales), Russia (1.74 percent) and Morocco (1.72 percent). The lowest rates of shrink were found in Taiwan (0.91 percent), Hong Kong SAR (0.95 percent), and Japan and Austria (both 1.04 percent). The US rate was 1.59 percent.

Retailers can combat this trend by being proactive and implementing audit programs to monitor the use of loss prevention policies.

"Of the top 50 global retailers who responded to the survey, the ones which reported a decline in shrink from the previous year did not construe loss prevention merely as a matter of theft, but worked across their operations to systematically combat shoplifting, employee theft, vendor loss and administrative errors. Ninety-six percent of these retailers' stores used audit programs to monitor the use of loss prevention policies and above all, the retailers increased their loss prevention spending almost twice as much as the global average," said Professor Joshua Bamfield, Director of the Centre for Retail Research and author of the study.

TAGS: Finance
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