Theft a $2.7 billion problem for retailers

Shoplifting, employee or supplier fraud, and administrative errors are collectively costing Australian retailers $2.7 billion per year, according to new statistics published in the 2014-2015 Global Retail Theft Barometer.

While retail shrink dropped in Australia from 1.00 per cent of sales in 2013-2014 to 0.96 per cent during 2014-2015 (based upon responses from common retail respondents who participated in Global Retail Theft Barometer surveys both years) the problem continues to cost  the average household more than A$424 per year.

“Globally, this compares to 1.42 percent, a figure also up from the previous 0.94 percent average of all common retailers surveyed the previous year. In fact, amongst the four APAC countries that were surveyed, Australia registered the lowest shrinkage rate (1.02 per cent) during 2014–2015,” Mark Gentle, VP – sales Asia Pacific with Checkpoint Systems (Aust/NZ), said.

Australia ranks nine out of 24 in the globe on shrinkage, with shoplifting accounting for 39 per cent of all shrinkage billion. The study found that the second highest source of shrinkage was dishonest employee theft, 25 per cent; followed by administrative and non-crime losses, 23 per cent; and vendor/supplier fraud, 13 per cent.

The report found that shoplifters and dishonest employees in Australia primarily targeted small and easy to conceal items such as mobile accessories, batteries, fashion accessories and razor blades.

Speaking to C&I Media, Gentle said items such as batteries, razor blades, magazines, and tobacco, which are primarily stocked in convenience stores and supermarkets, tend to be taken because the products are necessities but have high price points and also have a high re-sell value.

According to the Global Retail Theft Barometer,  APAC supermarkets/grocery retailers (1.68 per cent), witnessed the highest shrink rates because of the widespread prevalence of internal and external retail theft targeting their merchandise, followed by sports goods stores (1.32 per cent) and hypermarkets/mass merchandisers (1.06 per cent)

Gentle advises convenience stores to implement a mix of loss prevention solutions including surveillance and CCTV as well as employee training and pre-employment background screens for potentially employees, especially of casuals recruited for peak periods.

“It can be hard in convenience when you have someone behind the counter and not on the shop floor. Stores need to educate staff about what to look for. It is important you have awareness programs both for internal training and external signage of techniques and solutions used to prevent theft. Staff also need higher vigilance, especially during holiday and high sales periods when there is a higher footfall,”Gentle said.

“To combat shrink, retailers are adopting strategies to approach losses from a wider perspective from all levels within the organisation and work with their supplier and solutions partners. With the right technologies, people and processes, they can achieve improved merchandise availability, which directly impacts shoppers’ satisfaction and retailers’ profitability.”

The study, underwritten by an independent grant from Checkpoint Systems, Inc. (NYSE: CKP), was carried out in 2014-2015 by The Smart Cube and Ernie Deyle, a retail loss prevention analyst. It was based upon in-depth phone and written survey interviews conducted in 24 countries among more than 200 retailers representing nearly US$1 trillion in sales during 2014-2015.

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