Bulk of retail shrink due to shoplifting by customers and employees, study finds

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More than 78% of retail shrink is due to shoplifting by dishonest customers or employees. New products in fast-paced categories such as electronics, perfumes and sportswear being brought to market every year at premium prices are among the most likely to be stolen. Fresh meat remains a high-theft category for supermarkets and hypermarkets.

Those are the key findings of a new report by shrink management solutions supplier, Checkpoint Systems, which analyses global retail crime and loss prevention (LP) trends since 2001.

It found the number of retail thieves apprehended annually continues to be about 6m, but this is just the tip of the iceberg.

Retailers have, however, taken action in recent years. Of the 50 most stolen products, the number of items protected from theft has increased from 60% in 2007 to 75% in 2011 with EAS (Electronic Article Surveillance) source tagging and special high-theft solutions implemented by more retailers each year.

More than 86% of the LP professionals surveyed saw inventory management and/or loss prevention as primary drivers to implement RFID (Radio Frequency identification).

The report also points out the role of LP departments is evolving to increasingly provide a strategic service to the other areas of the business. 

Online retailing and new payment systems such as smart phones bring new risks to the industry, meaning that LP professionals would benefit from working closely with IT, store operations and marketing in the fight against crime, said Checkpoint Systems. 

The report notes this collaboration draws on joint methods for analysing shrink, while data obtained from electronic surveillance and RFID solutions is often used to make improvements in marketing, operations and logistics.

While the report points out the clear correlation between loss prevention spending and lower shrink, the length and depth of the global recession has resulted in increased rates of shrink since 2007. 

The report, produced by the Centre for Retail Research, includes recommendations for the retail industry. 

Changing Retail, Changing Loss Prevention analyses the evolution of retail crime and loss prevention uncovered by the Global Retail Theft Barometer publications since 2001.

Per Levin, president, shrink management and merchandise visibility solutions, Checkpoint Systems, said: “In this ever changing environment, we are pleased to support the global retail community with research that offers benchmarks and practical insights with the objective to help retailers improve their merchandise availability and grow sales profitably.”

Sample topics within the report include the following:

  • Sources of retail shrink
  • Trends in shrink
  • Explanations for shrink growth during the recession
  • The Impact of organised retail cCrime
  • Refund fraud
  • Impact of investment in loss prevention
  • Changing patterns in what people steal
  • Most stolen items
  • Electronic tagging and RFID
  • Detailed report conclusions

Retail Times’ readers can obtain a full version of the 17-page report here.