Report: Retail Shrink, Theft Up in 2009

Desperate people impacted by the recession resorted to retail theft in greater numbers over the past year, but retailers still spent less on technologies that help hinder theft. That is according to the 2009 Global Retail Theft Barometer, an annual report conducted by the Centre for Retail Research, which monitors shrinkage and crime in the retail industry. ‘Shrinkage’ or ‘shrink’ is defined as stock loss from crime or waste, expressed as a percentage of retail sales.

The report surveyed over 4,200 major retailers around the world and looked at key trends in retail shrinkage and crime in 41 countries and regions, including the U.S., China, India, Japan and countries in Europe. The total shrink in the 41 countries surveyed across the world cost retailers $114.8 billion, according to CRR, an average of 1.43 percent of global retail sales. This represented an increase of +5.9 percent over last year’s average shrink of 1.35 percent the group said.

Also see Organized Crime and Retail Theft: Facts and Myths

The increase in shrink was felt all over. All except three countries experienced an increase in shrinkage. Average shrinkage rates increased most in North America (+8.1 percent) and in Middle East/Africa (+7.5 percent) and were strongly influenced by a large increase in shoplifting, the report said.

CRR said significant increases in shrink rates occurred in the U.S. (where shrink rose by +8.8% to reach 1.61% of retail sales). However, the highest increases in shrink rates were experienced in Slovakia (+9.8%) and South Africa (8.2%).

Various types of retail business were impacted by shrink in 2009. The highest shrink rates were in apparel, clothing and fashion and accessories and the auto parts, hardware and building materials industry. Cosmetics, perfume, beauty supply and pharmacy-related business were third on the list. The lowest rates were in liquor, wine, beer/off-licence retail establishments.

Retailers reported that thieves stole a wide range of items, but tended to focus on expensive popular branded items including: razor blades/shaving products; cosmetics/face creams and perfumes; alcohol; fresh meat/expensive foodstuffs; infant formula; CDs, DVDs, and electronic games/wii; fashion (especially branded items, leather, handbags and accessories); mobile/cell phones; iPods/MP3 players, SD cards, electronic goods; and watches. Satellite navigation equipment and laptops were also increasingly stolen, according to the survey.

“The economic recession played a significant part in this increase. Crime has risen in most countries, whilst reduced profitability has led retailers to cut their security spending,” CRR officials said in a statement on the findings.

The reason for shrink included shoplifting, employee theft, organized crime and vendor fraud. In fact, 41.2 percent of retailers had experienced a significant increase in shoplifting in 2009 and 19.5 percent of retailers found employee theft had increased. Retailers believed that one-third (33.6 percent) of the shoplifting increase was caused by the recession and 22.2 percent of the rise in employee crime.

However, despite the increase in crime, retail security spending has fallen, particularly expenditure on security equipment such as CCTV and EAS (electronic tagging of merchandise), which fell by 11.4 percent, according to the report.