Global Theft Costs Retailers and Consumers $104 Billion Annually
November 12 2008 - 8:52AM
Business Wire
The level of global retail theft reached $104.5 billion in the past
year, leading to increased costs for both retailers and consumers
alike. The second annual Global Retail Theft Barometer found that
while global retail shrink as a percentage of total sales has
declined slightly in the past 12 months, the overall cost of retail
crime has increased substantially. "The cost of retail shrink is
not just borne by retailers, but by consumers and society at
large," said Rob van der Merwe, President and CEO of Checkpoint
Systems, Inc. (NYSE: CKP). "Shrink is a serious threat to
retailers' bottom lines, and amounts to a hidden 'tax' on consumers
who are already dealing with strain of their tightening household
budgets during the economic downturn." The Global Retail Theft
Barometer (GRTB) is an annual survey conducted by the Centre for
Retail Research in Nottingham, UK, and sponsored by Checkpoint, a
leading manufacturer and marketer of identification, tracking,
security and merchandising solutions for the retail industry and
its supply chain. This year's survey, the most complete analysis of
global shrink ever conducted, reports key findings on retail
shrinkage and crime in 36 countries and on five continents, based
on data from a confidential survey of 920 large retailers with
combined sales of U.S. $814 billion and 115,612 operating retail
outlets. All figures in the report relate to the twelve-month
period ending in June 2008. Global Costs of Retail Crime Global
retail shrinkage (stock loss from crime or waste expressed as a
percentage of sales) cost retailers $104.5 billion over the past
year, equivalent to 1.34% of retail sales. In North America, shrink
totaled $42.338 billion, or 1.48% of sales, with the U.S.
accounting for the majority of that figure. While the global figure
represents a marginal decline in shrinkage of $1.56 billion (-1.5%)
compared to 2007, due in part to the increase in survey respondents
and a slight decline in shrink, the overall cost of crime to
retailers has increased by $4.7 billion since last year. The cost
of retail crime, calculated on the basis of crimes by customers,
employees and suppliers/vendors (excluding internal error), plus
the costs of loss prevention, were $112.78 billion in 2008,
compared to $108.1 billion last year. �This sum represents a tax
imposed on honest people by retail criminals of $229.73 per
household or $71.12 for every single person in the 36 countries
surveyed," said Professor Bamfield, Director of the Centre for
Retail Research. Who's to Blame? Employee theft is the largest
source of shrinkage for retailers in North America and Latin
America (46.3% and 42.0% respectively), while customer theft is the
leader in the Asia-Pacific region and Europe (53.8% and 46.8%
respectively). Globally, customer theft, including shoplifting and
organized retail crime, remained the largest source of shrinkage
loss in most individual countries, totaling more than $43 billion
(41.2% of total shrinkage). Employee theft accounted for 36.5% of
shrinkage ($38.15 billion), while supplier/vendor theft and supply
chain fraud represent 5.8% of shrinkage ($6.09 billion). Internal
errors and administrative failures (such as pricing, process or
accounting mistakes) accounted for 16.5% of losses ($17.22
billion.). The level of customer theft is increasing in North
America and Asia-Pacific, where the percentage of customer shrink
has increased 3.1% and 2.3%, respectively. In contrast, employee
theft in Europe rose from 28.6% to 30.5% in this period. Retailers
reported that stolen merchandise accounted for 38.4% (or $14.6
billion) of internal fraud, while almost one-quarter (23.8%) of
internal losses were in the form of stolen cash, coupons, vouchers
or gift cards (more than $9 billion). Current loss prevention
systems and processes helped retailers apprehended nearly 5.3
million customer and employee thieves in 2007-2008, the majority of
which (84.6%) were customers. The average amount stolen or admitted
per customer theft incident was $328. Employee theft sums were more
than 5.6 times greater per incident, averaging $1,842. The total
value recovered, including customer and employee theft, was $3
billion. �The primary role of most Shrink Management Systems is to
create a strong deterrence for theft by making the risk and reward
analysis less attractive for would-be thieves,� said Per Levin,
President, Shrink Management Solutions, Checkpoint Systems. �People
are used to a certain �lifestyle� and will try to maintain it even
if they lose their job or find themselves with a lower paying job
due to the recession. The reported $3 billion recovered from over 5
million individuals sends a strong deterrence message to society at
large. In the next few years systems and processes will need
constant improvements to increase the risk of detection for likely
thieves.� Retailers in Europe and North America apprehended the
largest numbers of thieves (2.8 million and 2.1 million,
respectively), with North America reporting the largest percentage
of employee thieves at 32.3%. Refund frauds and false markdowns
rose substantially, comprising 19.7% of internal fraud ($7.5
billion) -- an increase of 34% since last year. Collusion
represented 10.3% of losses ($3.9 billion). Large financial frauds,
also on the rise, accounted for 7.8% of internal fraud ($2.97
billion). North America also reported the highest average dollar
amount stolen by customers, at $747 per incident. The high average
in North America is thought to reflect the impact of organized
retail crime. Average amounts stolen per apprehension in other
regions are much lower -- $108 in Europe and $35 in Africa, for
example. However, in Europe the average amount stolen per employee
thief was $3,145 (compared to $1,391 in North America). In
Asia-Pacific, the average amount stolen by employees was $395.
�With the uncertainty surrounding our current climate, we believe
the industry can learn quite a bit from the data revealed in this
year�s GRTB,� noted van der Merwe. �We suspect the increase in
organized retail theft uncovered in the study could be directly
attributed to the downturn in our economy.� Most Vulnerable
Merchandise �Another interesting fact revealed in the survey is
that retailers on average provided no specific protection for
almost one-third (30.3%) of their top fifty most-stolen product
lines,� continued van der Merwe. �This represents an immediate
opportunity for improvement. As the recession increases pressure on
shrink, we are partnering with retailers to help solve their
biggest challenges. Most of them see the need to improve their
shrink management programs and it is critical to develop a targeted
approach for the most vulnerable products to protect their bottom
lines in 2009.� Thieves are remarkably consistent in their choice
of goods, regardless of geographic region, favoring merchandise
such as razor blades/shaving products, cosmetics/face
creams/perfumes, alcohol, fresh meat/expensive foodstuffs, infant
formula, CDs and DVDs, fashion, electronic games, cellular phones
and watches. Retailers estimated that on average they lost between
2% and 5% of new product lines to theft. Popular products such as
the Harry Potter books, electronic games, and recent DVDs reached
loss levels of up to 8%, causing supply shortages. Loss Prevention
and Impact of EAS Technology Global loss prevention costs were
$25.47 billion or 0.33% of retail sales, a decline from last year�s
0.35%. Electronic article surveillance (EAS) was the main method of
protecting high-theft items (used for 38.3% of product lines).
Other means of protection included keepers/safers, display in
locked cabinets or locked shelves, cables or loop alarms, and dummy
cartons or ticket systems (4.1%). North American and Latin American
retailers had higher loss prevention costs as a percentage of sales
(0.43%) compared to their counterparts in other regions, and were
more likely to utilize EAS technology. EAS was used in North
America and Latin America for 43.5% of vulnerable lines, compared
to 36% in Europe and 31.3% in Asia-Pacific/Africa. EAS source
tagging was used on 13.7% of vulnerable lines in North America and
Latin America, compared to 7.9% in Europe and 3.6% in
Asia-Pacific/Africa. "We hope retailers will use this year�s Global
Retail Theft Barometer as a tool to better understand current
global shrink trends,� concluded van der Merwe. �During a weak
economic climate, shrink is more likely to increase, so it is even
more important for retailers to remain vigilant in the fight
against shrink. Our goal in sponsoring this report is to help the
retail industry and loss prevention professionals formulate new and
more advanced responses to combat shrink in an ever-changing global
economy.� The Survey A total of 212 corporations in North America
(combined sales of $328 billion), 502 from Europe ($416 billion
sales), 131 from Asia-Pacific ($52 billion), 57 from Latin America
($14 billion) and 18 from Africa ($3.3 billion) responded to the
questionnaire sent to 3,900 major retailers covering all major
types of retail business in the 36 countries surveyed. The response
rate was 23.6%. This year, the survey was also expanded to include
data from Argentina, Brazil, Mexico, South Africa and Malaysia. For
additional information, visit www.globalretailtheftbarometer.com.
The Centre For Retail Research The second edition of the Global
Retail Theft Barometer has been produced by Professor Joshua
Bamfield, the Director the Centre for Retail Research
(www.retailresearch.org) with the cooperation of Checkpoint
Systems, Inc. The CRR is an independent organization providing
research and consultancy for the retail sector dealing with the
changing face of retailing and focusing upon retail fraud and
crime. It has carried out extensive studies dealing with the costs
of crime and the application of electronic and computerized systems
to combat shop theft and fraud in many parts of the world.
Checkpoint Systems, Inc. Checkpoint Systems, Inc. is the leading
supplier of retail shrink management solutions. Checkpoint's global
team helps retailers - and their suppliers - reduce theft, increase
inventory visibility and provide consumers with greater merchandise
availability through the company's rapidly evolving RF technology,
expanding shrink management offerings and Check-Net labeling
solutions. Listed on the NYSE (NYSE:CKP), Checkpoint operates in
every major geographic market and employs 3,900 people worldwide.
For more information, visit www.checkpointsystems.com. Notes for
Editors/Producers: For additional information, a PDF of the report,
theft images, a hard copy B Roll request and interviews, please
contact Bob Basmadjian at (908) 823-9400 or via e-mail at
spectrum_marketing@earthlink.net. Additionally, B Roll and Sound
Bites Are Available Via Satellite Feeds: Wednesday November 12,
2008 � 10:30-10:45 AM EASTERN Galaxy 3C, Transponder 21 (c-band,
analog) downlink freq: 4120 H � & � 4:00-4:15 PM EASTERN Galaxy
25, Transponder 15 (c-band, analog) Downlink freq: 4000 V
Checkpoint (NYSE:CKP)
Historical Stock Chart
From May 2024 to Jun 2024
Checkpoint (NYSE:CKP)
Historical Stock Chart
From Jun 2023 to Jun 2024