Checkpoint Systems, Inc.
Recession and reduced loss
prevention spending lead to largest increase in shrink since
study’s inception
Global shrink average rises by
nearly 6%, reaching 1.43% of retail sales
Cost of theft equal to an average
of $208 per family
Highest shrinkage by category:
Apparel theft in accessories and fashion clothing reached 3.85% of
sales, while meat theft in supermarkets hit 3.38%
The level of global retail theft reached $114.8 billion in 2009,
representing a significant increase of 5.9% over last year’s total
of $104.5 billion, according to the third annual edition of the
Global Retail Theft Barometer, a summary of which is available at
http://globalretailtheftbarometer.com/press/.
The study monitored the costs of shrinkage and crime in the
global retail industry between July 2008 and June 2009, and found
that the rise in shrink occurred in all regions surveyed, with
the greatest increase in North
America (+8.1%), Middle East-Africa (+7.5%) and Europe
(+4.7%).
“Retailers attribute one third of the increase in shoplifting to
the economic recession,” noted Professor Joshua Bamfield, Director
of the Centre for Retail Research and author of the study. “Many
have also noted a change in the type of offender and in the type of
products stolen.”
“While most businesses have suffered as a result of the
recession, few have been as hard-hit as the retail industry,” said
Rob van der Merwe, Chairman, President and CEO of Checkpoint
Systems, Inc., the sponsor of the study. “While retailers have had
to cut budgets in most areas, this year’s study shows the adverse
effect of cutting spending too deeply in the area of loss
prevention. Prudent spending in this area can have a very positive
effect on bottom-line numbers, and act as a force-multiplier,
especially as budgets for training programs and security personnel
are reduced.”
Correlation Between Reduced Security Spending and Increase in
Theft
“The 2009 study also found that retailers decreased their
spending on loss prevention and security by $900 million, no doubt
in response to their general need to trim budgets in tough times,”
continued Professor Bamfield. “However, the correlation between $900 million in
decreased security spending and a $10 billion increase in theft is
very significant. It highlights the importance of
continued advancement and improvement of loss prevention programs,
as reducing theft is key to the success and growth of retailers’
businesses.”
Loss prevention spending in 2009 was equivalent to an average of
0.31% of retail sales.
Global Retail Shrinkage Rates
Compared to last year’s survey, the losses of retailers in the
12-month period year ending June 2009 rose in 38 out of the 41
countries surveyed. Shrinkage, as a
percentage of retail sales rose by 5.9 percent this year to a
global average of 1.43%. This is a significant departure
from the previous two years, in which shrink as a percentage of
retail sales decreased.
While North America and Europe make up 40% and 38.4%,
respectively, of global shrinkage, the highest country-specific
rates were found in India, Morocco and Mexico and the lowest in
Hong Kong, Taiwan and Austria.
“Although there are commentators that view retail crime as a
harmless or intriguing social phenomenon or simply as a ‘cost of
doing business’, this ignores the impact of the cost of retail crime to the general public,
which, in 2009 cost 553 million families in the 41 countries
surveyed an extra $208 on their shopping bill,” said
Professor Bamfield.
Shrinkage by Global Vertical Markets
Shrinkage varies according to business type, vertical market and
country. In 2009, some of the highest average shrinkage rates were found in
apparel/clothing and fashion/accessories (1.84%) or
cosmetics/perfume/beauty supply/pharmacy (1.77%).
In apparel/clothing and fashion,
the highest shrinkage losses were seen in accessories
(3.85%) and in fashion/tailored clothing (3.64%). These
product groups suffered the highest shrinkage in all regions
surveyed (North and Latin America, Europe, Asia-Pacific and Middle
East-Africa).
For food items/groceries, the
highest shrinkage was reported in fresh meat with 3.38%,
which is two and a half times more than the global shrinkage rate
of 1.36% for foodstuff. Luxury cooked meats also reached a high
shrinkage rate of 2.72%.
Global Cost of Retail Crime
In the 2009 edition of the survey, the global costs of retail
crime (the charge that crime imposes on retailers) was $120.5
billion including loss prevention costs. It is made up of
shoplifting losses (40.5 percent), employee theft (33.8 percent),
supply chain losses (5.3 percent) and loss prevention costs (20.3
percent).
While shrinkage has increased, security spending has decreased
almost everywhere. In more mature markets, such as North America
and Europe, loss prevention expenditure tends to be higher than in
emerging markets. In North America,
loss preventing spending represented 0.40% of retail sales, a fall
of $811 million from 2008. In Europe retailers spent an
equivalent to 0.29% of retail sales compared to 0.34% in 2008
In Latin America, loss prevention spending was 0.18% of sales, a
reduction of $33 million. In Asia-Pacific the average for security
spending was 0.17% and in Middle East-Africa 0.20% against a global
average of 0.31% of retail sales.
“It is interesting to note that spending on security systems and
equipment fell by a much greater amount than spending on outsourced
security personnel,” commented Bamfield. “While a combination of
several approaches to security is most effective, there are
definite advantages to increase the effectiveness of personnel by
employing a comprehensive shrink management solution and strong
loss prevention processes.
Merchandise Theft
Merchandise theft reached a total of $64.51 billion in 2009. The
amount of merchandise stolen by shoplifters and employees
represents 72% of the total shrinkage. Most merchandise was stolen
by shoplifters, who were responsible for $48.8 billion of stolen
goods. It is here that loss prevention can have its greatest impact
by deterring would-be shoplifters and enabling merchandise
recovery.
Economic Recession Impact
“There is some criminological evidence that crime rises as
unemployment rises and there are indications that crime is a much
more important issue for retailers now than two or three years
ago,” said Professor Bamfield.
“Some offenders may otherwise face real hardship. People whose
family income has fallen because of unemployment or work-sharing
may feel that they need to steal in order to maintain their
previous lifestyle. The failure of the financial system and the
political class in many countries has disillusioned many people,
who may feel that they have to look after their own interests -
however illegally - because no one else can be trusted to do so,”
continued Bamfield.
The survey shows that shrinkage and offending have increased
over the past year, and that retailers attribute one-third of increased
shoplifting, and a little more than one-fifth of increased employee
theft, to the recession. “It seems that the pattern of
offending has altered. This is likely to be truer of shoplifting
than of employee theft as employees are more eager to retain their
jobs when there are fewer jobs available,” said Bamfield.
Most Vulnerable Merchandise
Thieves tend to focus on small and easily-concealed, expensive,
branded items that have considerable popular appeal and are easily
re-sellable: electronic games/Wii, DVDs/entertainment, iPods/MP3
players, clothing, cosmetics/face creams/perfumes, alcohol, fresh
meat/expensive foodstuffs, which appear most frequently on the list
of most vulnerable merchandise. Other most-stolen products are
razor blades/shaving items, mobile/cell phones and watches.
Apprehension of Thieves
The number of shoplifters and employee thieves apprehended by
retailers amounted in 2009 to 5.8 million – the size of many
countries - an increase of 500,000 compared to the previous year.
This increase may be due in part to the overall increase in crime.
Of those apprehended, 85.6% were shoplifters and 14.4%
employees.
The average amount stolen or
admitted by shoplifters was $225.90 ($436.24 in North
America). The average
employee theft was $1,889.02 in North America compared to
$2,535.52 in Europe.
Loss Prevention and Innovation
“The recession makes loss prevention a more difficult task, but
also more important,” said Per Levin, President, Shrink Management
Solutions, Checkpoint Systems. “While 5.8 million theft-incidents
were stopped and nearly $6 billion in stolen merchandise was
recovered in 2009, it was not enough to keep shrinkage from
spiking. But there are still quick wins available. For example, 28
percent of products that are most attractive to thieves remain
unprotected. We have seen significant innovation taking place in
the industry, and there are new and effective solutions available
today, from comprehensive product protection strategies to
state-of-the-art shrink management systems. When brought together
in a holistic fashion they can help retailers protect their
businesses and prepare for profitable growth”
“With numerous studies supporting the conclusion that investing
in and focusing on Loss Prevention decreases retail shrink, we hope
this year’s Global Retail Theft Barometer provides the data
retailers need to support their loss prevention efforts,” concluded
Professor Bamfield.
The Survey
Started in 2001, the Global Retail Theft Barometer (GRTB) is an
annual survey conducted by the Centre for Retail Research in
Nottingham, UK and sponsored by Checkpoint Systems. This study is
now the largest and most comprehensive survey of retail theft and
crime in the world. The study covered 1.069 corporations with total
revenue of $822 billion. Respondents to the questionnaire included
201 corporations in North America (combined sales of $292 billion),
567 from Europe ($452 billion sales), 196 from Asia-Pacific ($59
billion), 67 from Latin America ($15 billion) and 38 from Middle
East Africa ($4 billion). The new countries included in the study
this year are China (Shanghai, Beijing, Guangdong and Hong Kong
SAR), Morocco, Taiwan and Turkey.
About The Centre For Retail
Research
The third edition of the Global Retail Theft Barometer (ninth
edition for Europe) has been produced by Professor Joshua Bamfield,
Director of 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 on 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.
About Checkpoint Systems,
Inc.
Checkpoint Systems is a global leader in shrink management,
merchandise visibility and apparel labeling solutions. Checkpoint
enables retailers and their suppliers to reduce shrink, improve
shelf availability and leverage real-time data to achieve
operational excellence. Checkpoint solutions are built upon 40
years of RF technology expertise, diverse shrink management
offerings, a broad portfolio of apparel labeling solutions,
market-leading RFID applications, innovative high-theft solutions
and its Web-based Check-Net data management platform. As a result,
Checkpoint customers enjoy increased sales and profits by improving
supply-chain efficiencies, by facilitating on-demand label printing
and by providing a secure open-merchandising environment enhancing
the consumer’s shopping experience. 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.
Photos/Multimedia Gallery Available:
http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6095125&lang=en
Checkpoint (NYSE:CKP)
Historical Stock Chart
From Jul 2024 to Aug 2024
Checkpoint (NYSE:CKP)
Historical Stock Chart
From Aug 2023 to Aug 2024