'Shrink'--shoplifting, employee or supplier fraud, organized retail crime, administrative errors--cost worldwide retail industry more than US$112B last year, representing 1.4% of retail sales, on average, finds study

Cindy Allen

THOROFARE, New Jersey , November 12, 2013 (press release) – Shrink, comprised of shoplifting, employee or supplier fraud, organized retail crime and administrative errors, cost the retail industry more than $112 billion globally last year, according to the 2012-2013 Global Retail Theft Barometer, and represented 1.4 percent of retail sales, on average.

The study, underwritten by an independent grant from Checkpoint Systems, Inc. (NYSE: CKP), was undertaken in 2013 by Euromonitor International, and was based upon in-depth phone and written survey interviews conducted in 16 countries among retailers covering 160,000 stores representing $1.5 trillion in sales in 2012.

According to the study, shrink is on the rise in most countries with increases noted in shoplifting, employee theft and organized retail crime. The lowest shrink rates were recorded in Japan (1 percent of retail sales), followed by Hong Kong, Australia and Germany (1.1 percent). The US came in at 1.5 percent of retail sales. The highest rates were recorded in Brazil and Mexico (1.6 percent). Global retailers blamed lagging economic recoveries and organized retail crime for high theft rates.

The cost of shrink to US shoppers averaged $300 per household.

Most Stolen Merchandise

Among the most stolen merchandise reported by the retailers were fashion accessories, jeans, footwear and lingerie/intimate apparel, high-value electronics, consumer health such as allergy treatments, milk formula, electronic games and satellite navigation/GPS, mobile device accessories such as cases and earphones.

Retail respondents with particularly strong investments in loss prevention told researchers they believe that they manage shrinkage well, and typically reported shrink rates well below the respective country average, with investments clearly paying off. In fact, UK and German retailers stated that improving loss prevention methods helped them to keep shrink under control. Overall, retailers interviewed estimated their future loss prevention investments would increase or stay stable.

According to Euromonitor International, “Shrink is a multi-dimensional threat for retailers across the globe, with shoplifting and employee theft, including organized crime, on the rise. Growing shrink concerns have put loss prevention high on the agenda of retailers; companies are keen to invest in effective and proven loss prevention methods, collaborating with technology companies and specialists for loss management solutions to diminish these shrink problems.”

“Some retailers still have a way to go by expanding existing loss prevention solutions providing a sure return on investment to reduce theft. Forward-looking retailers are deploying RFID-based solutions that combine protection with visibility at the item level. This type of strategic platform, combined with investments in people and processes, opens up new horizons to reduce out of stocks, improve merchandise availability for consumers and increase sales for the retailers,” said Per Levin, President and Chief Sales Officer Shrink Management & Merchandise Visibility Solutions Checkpoint Systems.

Interested parties can obtain a copy of the 2012-2013 Global Retail Theft Barometer report via GlobalRetailTheftBarometer.com. Retailers wishing to participate in the Global Retail Theft Barometer 2013-2014 study may register here.

About Euromonitor International. (www.Euromonitor.com)

Winner of the 2013 Private Business of the Year Award, Euromonitor International is the world leader in strategy research for consumer markets. As an independent company, we offer unmatched detail and unbiased research for every region, country, category and channel. From socio-economic context to intimate detail on the smallest products or markets, Euromonitor provides market research focused on your organization’s needs.

Our extensive network of strategic analysts in 80 countries provides the depth of global, national and local business information required in today’s increasingly international business environment. With offices around the world and market research on every key trend and driver, we give you powerful access to the real story behind consumer change. Emerging countries or developed economies: we identify the next opportunity before anyone else.

About Checkpoint Systems, Inc. (www.checkpointsystems.com)

Checkpoint Systems is a global leader in merchandise availability solutions for the retail industry, encompassing loss prevention and merchandise visibility. Checkpoint provides end-to-end solutions enabling retailers to achieve accurate real-time inventory, accelerate the replenishment cycle, prevent out-of-stocks and reduce theft, thus improving merchandise availability and the shopper’s experience. Checkpoint's solutions are built upon 45 years of radio frequency technology expertise, innovative high-theft and loss-prevention solutions, market-leading RFID hardware, software, and comprehensive labeling capabilities to brand, secure and track merchandise from source to shelf. Checkpoint's customers benefit from increased sales and profits by implementing merchandise availability solutions to ensure the right merchandise is available at the right place and time when consumers are ready to buy. Listed on the NYSE (NYSE: CKP), Checkpoint operates in every major geographic market and employs 4,700 people worldwide.

Twitter @CheckpointSys

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