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According to the study, shrink is down slightly compared to 2012 in all regions except for Asia Pacific |
Shrink, comprised of shoplifting and organised retail crime, employee or supplier fraud and administrative errors, cost the global retail industry more than US$128 billion last year, according to the latest Global Retail Theft Barometer. This represents 1.29% of retail sales, on average.
The study, commissioned by Checkpoint Systems, Inc., and conducted by The Smart Cube and Ernie Deyle, a retail loss prevention analyst, covered 24 markets in four regions – Asia Pacific, Europe, North America and Latin America – among 222 retailers representing US$744 billion in sales in 2013.
According to the study, shrink is down slightly compared to 2012 in all regions except for Asia Pacific where the shrink rate increased from 1.26% in 2012 to 1.28% in 2013, representing a total of US$37.6 billion. This is primarily due to the higher shrinkage rate recorded in China where organised retail crimes increased significantly. Out of the four markets surveyed in the region, China recorded the highest shrinkage (1.53%), followed by Hong Kong (1.09%), Australia (1.06%) and Japan (0.97%).
Globally, the lowest shrink rates were recorded in Norway (0.83% of retail sales), followed by Japan (0.97%). The highest rates were recorded in Mexico (1.6%) and in China (1.53%).
Shoplifting is the largest source of retail shrinkage in the Asia Pacific, except for in Australia, where internal theft by dishonest employees accounted for most of the losses. Hong Kong recorded the highest for shoplifting – 55.3% of total shrinkage – compared to China (50.4%), Japan (47.6%) and Australia (30%).
Cost of retail crime
“A higher number of organised crimes and a higher cost of retail crime have fuelled spending on loss prevention as a percentage of revenue" |
According to the report, the global cost of retail crime (employee theft, shoplifting, loss prevention spend) amounted to US$180.38 billion, accounting for 1.81% of global retail sales. This translates into US$63.56 per person, usually in the form of increased prices.
“A higher number of organised crimes and a higher cost of retail crime have fuelled spending on loss prevention as a percentage of revenue. Out of the 24 markets survey globally, retailers in Hong Kong reported the highest spending on retail loss prevention on average (1.51% of revenue). This may help explain the improvement in retail shrinkage in the city in 2013,” said Mr. Ken Ng, Manager Director for Greater China at Checkpoint Systems.
Most stolen merchandise
The most stolen merchandise reported by retailers globally and across the Asia Pacific were relatively smaller items – including fashion accessories and mobile accessories – but wines and spirits were also among the most targeted by shoplifters.
Discounters, apparel specialist retailers, stationers/office supply stores and department stores in the Asia Pacific were the most affected by shrinkage. Electronics retailers suffered the least shrinkage, mainly due to enhanced loss-prevention systems and adequate inventory management.
The most popular loss prevention solutions in the Asia Pacific were electronic article surveillance (EAS) labels, hard tags and antennas, display in locked cabinets or shelves and dummy cartons.
“Retailers in the Asia Pacific are increasingly using RFID (radio frequency identification)-based solutions, which offer both protection and visibility at item level,” said Mr. Ng. “This type of technology, combined with more investment in people and technology, can help reduce out-of-stocks, improve merchandise availability for consumers and increase sales for retailers.”