Philadelphia -- A report released Tuesday by Checkpoint Systems and the Centre for Retail Research found that global shrink has reached its highest level since it began measuring the data in 2007.
According to the Global Retail Theft Barometer, shrink is up 6.6% globally and up 6% in the United States over last year. Costs globally are $119 billion and the overall shrink rate is 1.45% of sales. Driving the increases are rises in shoplifting, employee fraud and organized retail crime rates.
The study, which monitored the cost of shrink (loss from shoplifting, employee theft and administrative errors) in the global retail industry between July 2010 and June 2011, found that shrink increased in all regions surveyed. Customer theft, including shoplifting and organized retail crime, up 13.4%, was the primary cause in most countries costing retailers $51.5 billion or 43.2% of shrink.
Dishonest employees were responsible for $41.65 billion or 35% of shrink. Unlike in Europe and Asia, employee theft in North America and Latin America surpassed shoplifting, and was responsible for 44.1% of shrink in North America and 42.6% in Latin America. In addition, the average amount admitted stolen by employees was more than eight times the average stolen by shoplifters.
“Although there are commentators who view retail crime as a harmless or intriguing social phenomenon or simply as a cost of doing business, this ignores the impact of criminal gangs, growing levels of violence against employees and customers, and the links between retail crime and drugs, fraud and extortion,” said Professor Joshua Bamfield, director of the Centre for Retail Research and author of the study. “Moreover, retail crime on average cost families in the 43 countries surveyed an extra $200 on their shopping bill, up from $186 last year. In the U.S., that figure was $435.”
The 2011 study also found that while retailers increased their spending on loss prevention and security by 5.6% over 2010 to $28.3 billion globally, loss prevention equipment's share of total loss prevention expenditures actually declined slightly. This may be why fewer thieves were apprehended globally. The region with the sharpest decline in loss prevention equipment’s share of expenditures was Europe, down 6.25%. Notably, shrink in Europe increased 7.8%, topping the global average.
The countries suffering the highest rate of shrink included India (2.38% of retail sales), Russia (1.74%) and Morocco (1.72%). The lowest rates of shrink were found in Taiwan (0.91%), Hong Kong, Japan and Austria. The U.S. rate was 1.59%.
By retail category, apparel/clothing and fashion/accessories had an average shrink rate of 1.87%, followed by cosmetics/perfume/health & beauty/pharmacy (1.79%).