Correspodent , 27 October 2011
Indian retailers suffered the highest loss of stocks to theft
in the world for the fifth year in a row in 2011. Half of this
loss was attributed to shoplifting by customers. The silver lining
here was that India is the worlds only country where the
shrink rate (loss of stocks because of thefts by customer, employees
and supplier) came down in 2011, according to the Global Retail
Theft Barometer 2011.
The shrink rate as a percentage of sales was 2.38 per cent, costing
local retailers Rs 3,470 crore, according to the annual survey
conducted by the Centre for Retail Research in Nottingham, UK,
and underwritten through an independent grant from Checkpoint
Systems. The study was conducted across 43 countries between July
2010 and June 2011. In India, it covered 100 retailers, of which
60 were part of modern chains and 40 were from the unorganised
Shoplifting, employee or supplier fraud, organised retail crime
and administrative errors cost the retail industry US$119 billion
in 2011 or 1.45 per cent of sales. This global shrink rate is
6.6 per cent (0.8 per cent in Asia-Pacific) higher than the previous
year. Dishonest employees were responsible for US$41.65 billion
or 35 per cent of shrink. In Asia-Pacific, a majority of retailers
perceive dishonest customers as the single most important source
of loss, responsible for US$9.7billion of losses or 53.3 per cent.
However, the average amount admitted stolen by employees was more
than four times the average stolen by shoplifters.
Shrinkage reported by most retailers is due to multiple
causes, not only outright theft. This includes factors such as
supply chain and storage losses, quasi-shrinkage due to poor data
integrity, and due to causes that lie outside the store rather
than in-store, pointed out Devangshu Dutta, Chief Executive
of Third Eyesight, a New Delhi-based consulting firm which focuses
on the retail and consumer products ecosystem. Third Eyesight
works with retailers (including e-tailers), brands and manufacturers,
as well as service organisations and suppliers to the retail sector
and the consumer goods supply chain.
Although there are commentators who view retail crime as
a harmless or intriguing social phenomenon or simply as 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 US$200 on
their shopping bill, up from US$186 last year. In the U.S., that
figure was US$115 in Asia-Pacific.
The 2011 study also found that while retailers increased their
spending on loss prevention and security by 5.6 per cent over
2010 to US$28.3 billion globally, loss prevention equipments
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 equipments
share of expenditures was Europe, down 6.25 per cent. Notably,
shrink in Europe increased 7.8 per cent, topping the global average.
Of the top 50 global retailers who responded to the survey,
the ones which 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, said Bamfield.
In Asia-Pacific, shrinkage was highest among categories like
cosmetics, perfumes, health and beauty, and pharmacy; apparel
and accessories; and video, music and gaming. The most-stolen
items from the cosmetics category globally included shaving products,
perfumes, lipsticks, scissors, nail clippers, and tweezers. High
quality seafood, alcohol and fresh meat made up the top three
most-stolen grocery high-risk product lines.
So, where does this place India? Is there more than meets the
Said Dutta: The articles that I have read about the
study do not provide a comparison of modern retail stores in India
and their counterparts in the west. It would be useful to look
at a like-for-like comparison, rather than comparing unlike retail
formats, or taking an industry average, when the research
samples in different countries are so varied. Smaller stores lack
sophisticated information systems to capture and transmit data
as accurately as the large stores, as well as storage and handling
processes are also less sophisticated. This increases the shrinkage
due to non-theft factors, which would also reflect in the total
shrinkage. Having a higher proportion of traditional retail
outlets in a study sample can compound this inaccuracy.