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Retail Technology, Retail technology News

UK stores lose £4.9 billion to retail crime and error

Tuesday October 25 2011

2011 Global Retail Theft Barometer shows increased losses from UK stores, tallying with reduced card fraud figures

2011 Global Retail Theft Barometer shows increased losses from UK stores, tallying with reduced card fraud figures


Shoplifting, fraud, organised retail crime and administrative errors have cost the British High Street an estimated £4.9 billion in the last year, one of the highest figures ever recorded for the UK by The Global Retail Theft Barometer.


The study, conducted by the Centre for Retail Research and published by shrink, merchandise and labelling hardware and software provider Checkpoint Systems, shows that the total amount lost by British retailers from theft, fraud and error – evaluated as a percentage of sales – increased by 6.2% in the last 12 months.


While customer theft is estimated at 43.8% of total loss, theft by UK employees was also a major factor. In addition, internal error and loss from suppliers and vendors accounted for 16.2% and 3.9% of the total figure.


Recognition of bottom-line impact


Neil Matthews, Checkpoint Systems vice president for Northern, Central and Eastern Europe, said: “The fact that retail loss has increased so significantly should certainly not be taken lightly. It’s extremely worrying that the actions of some people can end up affecting innocent families financially, which is a cost the majority of people can ill-afford in this tough economic climate.”


On average, the Barometer estimated that thieves stole £79 per shopping spree, demonstrating that the typical theft was more likely to be branded merchandise that could be resold for a profit. This was reinforced by the fact that clothing and apparel reported the highest losses at 1.9% of sales. Within this category, accessories, outerwear and tailored clothing came in at the top, accounting for 3.7%, 2.8% and 2.4% respectively, of total retail losses. Natural and speciality foods also reported high levels of loss, as did cheese (3.9%), which experienced more than double the global amount lost of 1.3%. Meanwhile in other high-risk categories – health and beauty – loss of items such as mascara, eyeliner and eye shadow increased to 2.4%.


Matthews continued: “High losses are experienced by a relatively small number of product lines, particularly those that have been recently launched, expensive, easily stolen and in great demand. Compared to the 2010 figures, loss among the high-risk food lines has shot up by more than the global average, evidence that they are increasingly being targeted by shoplifters.”


That said, the report concluded that the picture could have been a lot worse had UK retailers not invested more than £1 billion on security and loss prevention in the last year. High-risk product lines such as meat are increasingly being tagged which reinforces the fact that security labels remain the most popular form of product protection. This form of protection was followed by hard tags and plastic security cases (‘keepers’). Staff training has also played a vital role, with 95% of retailers already implementing programmes to ‘spot and deter’ theft and a further 90% planning on initiating additional programmes.


Loss prevention spending decreases


However, while retailers increased their spending on solutions to counter the problem, loss prevention equipment's share of total loss prevention expenditures actually declined slightly, perhaps explaining why fewer thieves were apprehended globally.


“Of the top 50 global retailers who responded to the survey, the ones that reported a decline in shrink from the previous year did not construe loss prevention merely as a matter of theft, but worked across their operations to systematically combat shoplifting, employee theft, vendor loss and administrative errors. Ninety-six percent of these retailers’ stores used audit programmes to monitor the use of loss prevention policies and above all, the retailers increased their loss prevention spending almost twice as much as the global average,” added The Centre for Retail Research’s Professor Joshua Bamfield.


Matthews concluded: “Global economic growth stalling in the past year has meant that not all retailers increased the rate of capital equipment expenditure at the same pace as the rest of their loss prevention expenditure. Whilst the majority of store operators have definitely been making strides in the fight against retail loss, the results from those who do not see it as such a serious issue may be seen in the slightly higher figures.”


Steve Rothwell, chief executive of mobile couponing company Eagle Eye Solutions, commented: “We’ve always known that the cost of retail fraud was significant. But this research quantifies the losses for retailers.”


He said that, with UK sales figures generally remaining weak, it was critical that retailers stay one step ahead in order to fight for their share of Christmas revenues. “They should be looking at how they can combat this risk as a matter of urgency,” he warned.