Worldwide thefts cost retailers US $104 billion annually - Survey

13 Nov '08

8 min read

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 shrinkageloss 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.).

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