Study: Retail Theft Up 6.6%, Costs Global Retailers $119B

PHILADELPHIA — Global retail theft totalled $119 billion during the 12-month period ending in June, a 6.6 percent increase compared to the same period one year ago, according to a new report.

The 2011 Global Retail Theft Barometer report found that retail shrink increased in all regions surveyed. Sponsored by an independent grant from Checkpoint Systems, the report also found that customer theft, up 13.4 percent, was the primary cause for the increase in most countries, costing retailers $51.5 billion.

“Retail crime on average cost families in the 43 countries surveyed an extra $200 on their shopping bill. That’s up from $186 last year,” Professor Joshua Bamfield, director of the Centre for Retail Research says. “In the U.S., that figure was $435.”

Dishonest employees counted for 35 percent, or $41.65 billion, of shrink, according to the report. In North and Latin America, employee theft topped shoplifting, with employee theft being 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.

Bamfield, who authored the report, notes that criminal gangs and the increase of violence against employees and customers plays a major role in the rise of retail thefts.

“There are commentators who view retail crime as a harmless or intriguing social phenomenon or simply as a cost of doing business,” he says. “That ignores the links between retail crime and drugs, fraud and extortion.”

Global retailers also spent $28.3 billion on loss prevention and security, an increase of 5.6 percent compared to 2010, according to the study.

“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,” Bamfield says. “They 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. Above all, the retailers increased their loss prevention spending almost twice as much as the global average.”

Additional highlights from the report included an increase in shrink among footwear, outerwear, cosmetics and some food products. India had the highest rate of shrink as a percentage of sales (2.38 percent of retail sales), while Taiwan had the lowest (0.91 percent of retail sales). The United States remained in the middle with a rate of 1.59 percent.

“As global economic growth stalled in the past year, retailers did not increase capital equipment expenses at the same rate as the rest of their loss prevention costs. Regrettably, that may be seen in higher shrink numbers,” Farrokh Abadi, president of Shrink Management Solutions, Checkpoint Systems says. “Those who most successfully combated shrink last year invested cautiously in comprehensive loss prevention solutions.”

Roughly, 1,187 of the world’s largest retailers contributed responses for this report. Together, they have combined sales of $986 billion.

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