UK retailers see shoplifters wipe £800m off their bottom line, Checkpoint Systems research shows

Shoplifting accounts for 26% of inventory loss

Shoplifting accounts for 26% of inventory loss

According to new figures released today, UK retailers lost more than £800m to shoplifting in 2014, with phone accessories, wine, lingerie, fresh meat and razor blades among the most stolen items. In total, retailers saw inventory loss – from customer and employee theft, supplier and administrative errors – amount to £3.1bn, equating to 0.89 percent of total sales last year.

The losses are highlighted in the annual Global Retail Theft Barometer, underwritten by an independent grant from Checkpoint Systems, Inc., which reveals that shrinkage as a percentage of sales declined by 0.08 percentage points on the year before. However, in terms of value lost, the UK retail industry ranked sixth highest globally, behind the USA, China, Germany, Russia and Japan.

The study highlights that, in 2014, shoplifting accounted for 26% of all inventory loss, while retailers saw £770m stolen by employees and a further £300m lost as a result of supplier errors. UK stores saw the highest level of administrative and non-crime losses in the world, with pricing mistakes and other internal oversights accounting for 40% of all shrinkage – the equivalent of £1.25bn.

For UK retailers, the study raises concern that an ever evolving population and the ease of travel throughout Europe is leading to an increase in organised retail crime. It also predicts that UK stores may suffer losses in the millions over the next few months alone, as shoplifters target items during the key winter sales periods, including Black Friday and Boxing Day. Thieves are expected to use the increased footfall and influx of temporary sales staff as an opportunity to steal more merchandise.

Small items, as well as items with a high resale value, were again among the most stolen in 2014, with fashion accessories, power tools, mobile device accessories, wine and spirits, and razor blades all topping the charts in their respective vertical sectors. Interestingly, ahead of the Christmas period, Checkpoint Systems revealed that this year one major UK retailer is security tagging prosciutto ham, in an effort to reduce shrinkage of one of its most popular festive food lines over the key winter sales period.

According to official Police data, published by the Home Office, there were more than 329,000 recorded incidents of shoplifting across the UK in 2014 – a three percent increase on 2013 levels and around 27,000 more than in 2012. Worryingly, this is just the tip of the iceberg with stores sometimes not identifying thieves and some simply not even reporting incidents.

A number of police forces in the UK reported increases of more than five percent, with the Metropolitan Police Service recording a 9.1% increase and the Durham Constabulary topping the chart with a 20.7% rise in just one year. Of the 44 forces analysed, just 14 recorded a decline in shoplifting last year.

The Global Retail Theft Barometer reveals that the UK retail industry spent around £2bn – an average 0.57% of sales – on loss prevention solutions in 2014. Of the retailers surveyed, CCTV/DVR, security guards, and alarm monitoring solutions are used by a majority of stores in the UK, with 75% of the respondents reporting usage of each of the solutions during 2014. Among product-specific loss prevention solutions, 63% of retailers used EAS (Electronic Article Surveillance – labels and hard tags/EAS antennas) solutions.

Across Europe, the source of loss is seen to vary greatly, with Germany seeing 65% of its losses come from shoplifting and Russia finding employees accounted for 47%. Indeed in the UK alone, from sector-to-sector the source of shrinkage varied, with grocery stores seeing administrative and non-crime errors accounted for the largest share of losses, while beauty specialists saw dishonest staff as their biggest issue, accounting for 40 percent of shrink. For home improvement and gardening stores, shoplifting was the key cause of shrinkage, with customers responsible for 70% of their losses.

Global account director, Russell Holland, said: “Most people expect shoplifting to be the main source of losses in the retail industry – indeed with around 900 incidents being recorded by the police every day it remains a major issue for stores across the country. However, there are other areas, such as internal loss and process errors that should not be forgotten. The use of emerging technologies, such as RFID, will help retailers reduce losses in these areas and improve the bottom line.

“The problem is that shrinkage not only represents an erosion of the bottom line, it means someone else can’t buy that product for its true value. Retailers are aware of this, and we’re working with stores up and down the country to implement solutions that tackle all aspects of inventory loss.

“The big takeaway from this year’s study is that while UK retailers have invested wisely to reduce shrinkage as a percentage of sales, areas like administrative losses are where significant savings can easily be made. The high street has still not got back to pre-recession heights and pressure from the rise of omnichannel retailing means losses must be kept to a minimum to ensure long term success,” said Holland.