Theft, shrink rates rise globally

Light-fingered employees, shoplifting and organized-retail-theft crime rings contributed to an increase in global shrink rates this year. Shrink, defined as stock loss from crime or waste, expressed as a percentage of retail sales, is at its highest level since 2007. That is according to the 2011 Global Retail Theft Barometer, an annual survey conducted by the Centre for Retail Research in Nottingham, UK, that looks at key trends in retail shrink and crime in 43 countries and regions around the world.

This year, shoplifting, employee or supplier fraud, organized retail crime and administrative errors cost the retail industry $119 billion in 2011, or 1.45 percent of sales, said Professor Joshua Bamfield, Director of the Centre for Retail Research and author of the study. The global shrink rate is 6.6 percent, and 6 percent in the U.S. -- higher than the previous year and the highest percentage recorded by the survey since it began in 2007. Almost half, or 47.8 percent of U.S. retailers surveyed, reported increased losses from organized retail crime this year.

The study, underwritten by an independent grant from security-products firm Checkpoint Systems, monitored the cost of shrink as a result of loss from shoplifting, employee theft and administrative errors between July 2010 and June 2011. It found that shrink increased in all regions surveyed. Customer theft, including shoplifting and organized retail crime, was up 13.4 percent and was the primary cause in most countries, costing retailers $51.5 billion, or 43.2 percent of shrink.

[How do thieves pull it off? See the top ten tactics in retail theft today]

Dishonest employees were responsible for $41.65 billion or 35 percent of shrink. Employee theft in North America surpassed shoplifting, and was responsible for 44.1 percent of shrink in the region. The average amount admitted stolen by employees was more than eight times the average stolen by shoplifters.

Bamfield noted the price of shrink control costs U.S. shoppers on average about $435 per family.

“Although there are commentators who view retail crime as a harmless or intriguing social phenomenon or simply as a cost of doing business, this ignores the impact of criminal gangs, growing levels of violence against employees and customers, and the links between retail crime and drugs, fraud and extortion,” said Bamfield.

[See 2010’s results in Report: Global theft decreases in 2010]

Some of the highest average shrink rates were found in apparel/clothing and fashion/accessories at 1.87 percent, followed by cosmetics/perfume/health & beauty/pharmacy at 1.79 percent. Some of the most stolen items include cheese, shaving products, meat, clothing accessories and outerwear. 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 31 percent to 2.94 percent.