Industry News
Global Shrinkage Drops to 2007 Levels A
ccording to recently released results from the 4th Annual Global Retail Theft Barometer (GRTB) for the twelve-month period ending June 2010, total global shrinkage cost respondent retailers $1.07 billion, or an average of 1.36 percent of retail sales. The results are 5.6 percent lower than last year’s 1.44 percent, and match the level reached when the report went “global” in 2007. All four geographic data subsets covered by the survey recorded reductions over last year as shown in the chart below.
Region
2009
2010
% Change
North America
1.60%
1.49%
-6.9%
Europe
1.33%
1.27%
-4.5%
Asia-Pacific
1.24%
1.16%
-6.5%
Latin America
1.67%
1.60%
-4.2%
Global Total
1.44%
1.36%
-5.6%
Europe and North America are the largest components. A five-year look back indicates that the sharp increase in shrinkage in 2009, no doubt caused by the global recession, may have been an anomaly. This year’s drop places the region averages at 2006 to 2008 levels. This is the third consecutive year that Latin America has recorded the highest shrinkage as a percentage of sales. However, the trend for Latin America matches those of Europe and North America, which is relatively stable aside from the 2009 spike. The Asia-Pacific five-year trend differs in that the general direction of shrinkage is downward, again, excluding the spike in 2009. The countries with the highest rates of shrink as a percentage of sales were India (2.72%), Morocco (1.64%) and Brazil (1.64%). The lowest rates of shrinkage were found in Taiwan (0.87%), Hong Kong SAR (0.91%), and Austria (0.97%). Twenty-two countries posted shrinkage rates that exceeded the global total, and twenty countries posted lower rates. The top ten countries in terms of the highest dollar loss are the U.S. ($39.3 billion), Japan ($9.3 billion), United
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by Robert L. DiLonardo DiLonardo is a well-known authority on the electronic article surveillance business, the cost justification of security products and services, and retail accounting. He is the principal of Retail Consulting Partners, LLC (www.retailconsultingllc.com), a firm that provides strategic and tactical guidance in retail security equipment procurement. DiLonardo can be reached at 727-709-6961 or by email at rdilonar@tampabay.rr.com.
Kingdom ($6.6 billion), Germany ($6.1 billion), France ($5.8 billion), Italy ($3.9 billion), Canada ($3.5 billion), Russia ($3.3 billion), Spain ($3.3 billion), and Mexico ($2.8 billion). Those ten countries reported losses of $83.9 billion, or 78 percent of the global total.
Scope of the Project
Funded by a grant by Checkpoint Systems, the GRTB is the most comprehensive study of its kind. The data is gathered from a survey prepared by the Nottingham, England-based Centre for Retail Research, under the guidance of its director, Dr. Joshua Bamfield, a well-known expert in retail crime issues. This year the survey was sent to 4,900 of the world’s largest retailers, and usable responses were received from 1,103 companies with combined retail sales of $873.8 billion representing a cross section of vertical markets in 42 countries, including Russia reporting for the first time. There are currently two countries, Morocco and South Africa, representing the Middle East/Africa. Plans call for an expansion in this area of future growth. In addition to reporting on the magnitude and trends of shrinkage, the survey attempts to gather useful information about a wide array of important topics, including: ■ C auses of shrinkage, with a percentage breakdown by type and magnitude, ■ L ist of most-stolen merchandise by vertical market, ■ M ethods used to combat shrinkage, with a breakdown by type, and information about future implementation, ■ R etail loss prevention and security spending, with a percentage breakdown by type and a calculation of total spending as a percentage of sales, and ■ T he global cost of retail crime.
Causes of Shrinkage
Globally, customer theft, including shoplifting and organized retail crime (ORC), was thought to cause the greatest shrinkage in most countries—42.4 percent of total shrinkage, compared with 42.5 percent in 2009. Dishonest employees were estimated to be responsible for 35.3 percent of total shrinkage, compared with 35.5 percent in 2009. Internal error and administrative failure, such as pricing, process, or accounting mistakes, accounted for 16.9 percent of total shrinkage, compared with 16.4 percent in 2009.
January – February 2011
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