MEDIA RELEASE PR37008
Study Finds Retail Theft Reached SGD 160 Billion (US$115 Billion) World-Wide
HONG KONG, Nov. 10 /PRNewswire-Asia-AsiaNet/ --
-- Recession and reduced loss prevention spending lead to largest increase
in shrink since study's inception
-- Global shrink average rises by nearly 6% reaching 1.43% of retail sales
-- Cost of theft/ honest tax equal to an average of US$169.9 (SGD 236) per
family in Singapore
-- Apparel theft in accessories and fashion clothing reached 3.85% of
sales, while meat theft in Supermarkets hit 3.38%
-- Shrinkage in Singapore was US$ 170 million (SGD 236 million), which was
equivalent to 1.19% of retail sales
The level of global retail theft reached US$114.8 billion (SGD 160 billion) in 2009,
representing a significant increase of 5.9% over last year's total of $104.5 billion
(SGD 145 billion), according to the third edition of the Global Retail Theft Barometer.
The study monitored the costs of shrinkage and crime in the global retail industry
between July 2008 and June 2009, and found that the rise in shrink occurred in all
regions surveyed, with the greatest increase in North America (+8.1%), Middle East-
Africa (+7.5%), Europe (+4.7%) and Asia Pacific (+4.2%).
In Singapore, shrinkage represented 1.19% of retail shrinkage as US$170 million (SGD
236 million).
"Retailers attribute one third of the increase in shoplifting to the economic
recession," noted Professor Joshua Bamfield, Director of the Centre for Retail Research
and author of the study. "Many have also noted a change in the type of offender and in
the type of products stolen."
"While most businesses have suffered as a result of the recession, few have been as
hard-hit as the retail industry," said Rob van der Merwe, Chairman, President and CEO of
Checkpoint Systems, Inc., the sponsor of the study. "While retailers have had to cut
budgets in most areas, this year's study shows the adverse effect of cutting spending
too deeply in the area of loss prevention. Prudent spending in this area can have a very
positive effect on bottom-line numbers, and act as a force-multiplier, especially as
budgets for training programs and security personnel are reduced."
"The 2009 study also found that retailers decreased their spending on loss
prevention and security by US$900 million (SGD 1.3 billion), no doubt in response to
their general need to trim budgets in tough times," continued Professor Bamfield.
"However, the correlation between US$900 million (SGD 1.3 billion) in decreased security
spending and a US$10 billion (SGD 14 billion) increase in theft is very significant. It
highlights the importance of continued advancement and improvement of loss prevention
programs, as reducing theft is key to the success and growth of retailers' businesses."
Loss prevention spending in 2009 was equivalent to an average of 0.31% of retail
sales.
Global Retail Shrinkage Rates
Compared to last year's survey, the losses of retailers in the 12-month period year
ending June 2009 rose in 38 out of the 41 countries surveyed. Shrinkage, as a percentage
of retail sales rose by 5.9 percent this year to a global average of 1.43%. This is a
significant departure from the previous two years, in which shrink as a percentage of
retail sales decreased.
While North America and Europe make up 40% and 38.4%, respectively, of global
shrinkage, the highest country-specific rates were found in India, Morocco and Mexico
and the lowest in Hong Kong, Taiwan and Austria.
"Although there are commentators that view retail crime as a harmless or intriguing
social phenomenon or simply as a 'cost of doing business', this ignores the impact of
the cost of retail crime to the general public, which, in 2009 cost 553 million families
in the 41 countries surveyed an extra US$208 (SGD 289) on their shopping bill," said
Professor Bamfield.
In Singapore, the honest tax imposed to each family as a result of retail crime was
US$ 169.9 (SGD 236).
Shrinkage by Global Vertical Markets
Shrinkage varies according to business type, vertical market and country. In 2009,
some of the highest average shrinkage rates were found in apparel/clothing and
fashion/accessories (1.84%) or cosmetics/perfume/beauty supply/pharmacy (1.77%).
In apparel/clothing and fashion, the highest shrinkage losses were seen in
accessories (3.85%) and in fashion/tailored clothing (3.64%). These product groups
suffered the highest shrinkage in all regions surveyed (North and Latin America, Europe,
Asia-Pacific and Middle East-Africa). A little difference was that footwear was also
one of the high-risk product lines in Asia Pacific, which accounted for 1.61% of
shrinkage rate.
For food items/groceries, the highest shrinkage was reported in fresh meat with
3.38%, which is two and a half times more than the global shrinkage rate of 1.36% for
foodstuff. Luxury cooked meats also reached a high shrinkage rate of 2.72%. High-
quality seafood was the top high-risk product lines in Asia Pacific, which accounted for
2.13% of shrinkage rate.
Global Cost of Retail Crime
In the 2009 edition of the survey, the global costs of retail crime (the charge that
crime imposes on retailers) was US$120.5 billion (SGD 167) including loss prevention
costs. It is made up of shoplifting losses (40.5 percent), employee theft (33.8
percent), supply chain losses (5.3 percent) and loss prevention costs (20.3 percent).
While shrinkage has increased, security spending has decreased almost everywhere. In
more mature markets, such as North America and Europe, loss prevention expenditure tends
to be higher than in emerging markets. In North America, loss preventing spending
represented 0.40% of retail sales, a fall of US$811 million (SGD 1.1 billion) from 2008.
In Europe retailers spent an equivalent to 0.29% of retail sales compared to 0.34% in
2008
In Asia-Pacific the average for security spending was 0.17%. It is the lowest among
all the regions surveyed.
"It is interesting to note that spending on security systems and equipment fell by a
much greater amount than spending on outsourced security personnel," commented Bamfield.
"While a combination of several approaches to security is most effective, there are
definite advantages to increase the effectiveness of personnel by employing a
comprehensive shrink management solution and strong loss prevention processes.
In Singapore, the security spending reached US$33 million (SGD 46 million) (0.23% as
percentage of sales) which was the 2nd highest in Asia Pacific, though the figure was
still lower than the global average of 0.31%.
Merchandise Theft
Merchandise theft reached a total of US$64.51 billion (SGD 89.6 billion) in 2009.
The amount of merchandise stolen by shoplifters and employees represents 72% of the
total shrinkage. Most merchandise was stolen by shoplifters, who were responsible for
US$48.8 billion (SGD 67.8 billion) of stolen goods. It is here that loss prevention can
have its greatest impact by deterring would-be shoplifters and enabling merchandise
recovery.
Economic Recession Impact
"There is some criminological evidence that crime rises as unemployment rises and
there are indications that crime is a much more important issue for retailers now than
two or three years ago," said Professor Bamfield.
"Some offenders may otherwise face real hardship. People whose family income has
fallen because of unemployment or work-sharing may feel that they need to steal in order
to maintain their previous lifestyle. The failure of the financial system and the
political class in many countries has disillusioned many people, who may feel that they
have to look after their own interests - however illegally - because no one else can be
trusted to do so," continued Bamfield.
The survey shows that shrinkage and offending have increased over the past year, and
that retailers attribute one-third of increased shoplifting, and a little more than one-
fifth of increased employee theft, to the recession. "It seems that the pattern of
offending has altered. This is likely to be truer of shoplifting than of employee theft
as employees are more eager to retain their jobs when there are fewer jobs available,"
said Bamfield.
Most Vulnerable Merchandise
Thieves tend to focus on small and easily-concealed, expensive, branded items that
have considerable popular appeal and are easily re-sellable: electronic games/Wii,
DVDs/entertainment, iPods/MP3 players, clothing, cosmetics/face creams/perfumes,
alcohol, fresh meat/expensive foodstuffs, which appear most frequently on the list of
most vulnerable merchandise. Other most-stolen products are razor blades/shaving items,
mobile/cell phones and watches.
Apprehension of Thieves
The number of shoplifters and employee thieves apprehended by retailers amounted in
2009 to 5.8 million - the size of many countries - an increase of 500,000 compared to
the previous year. This increase may be due in part to the overall increase in crime. Of
those apprehended, 85.6% were shoplifters and 14.4% employees.
In Asia Pacific, the average amount stolen or admitted by shoplifters was US$69.27
(SGD 96). The average employee theft was US$376.15(SGD 523) compared to US$1,889.02 (SGD
2,626) of global figure.
Loss Prevention and Innovation
"The recession makes loss prevention a more difficult task, but also more
important," said Per Levin, President, Shrink Management Solutions, Checkpoint Systems.
"While 5.8 million theft-incidents were stopped and nearly US$6 billion (SGD 8 billion)
in stolen merchandise was recovered in 2009, it was not enough to keep shrinkage from
spiking. But there are still quick wins available. For example, 28 percent of products
that are most attractive to thieves remain unprotected. We have seen significant
innovation taking place in the industry, and there are new and effective solutions
available today, from comprehensive product protection strategies to state-of-the-art
shrink management systems. When brought together in a holistic fashion they can help
retailers protect their businesses and prepare for profitable growth"
"With numerous studies supporting the conclusion that investing in and focusing on
Loss Prevention decreases retail shrink, we hope this year's Global Retail Theft
Barometer provides the data retailers need to support their loss prevention efforts,"
concluded Professor Bamfield.
The Survey
Started in 2001, the Global Retail Theft Barometer (GRTB) is an annual survey
conducted by the Centre for Retail Research in Nottingham, UK and sponsored by
Checkpoint Systems. This study is now the largest and most comprehensive survey of
retail theft and crime in the world.
The Study covered 1,069 corporations with total revenue of US$ 822 billion (SGD
1,143 billion). Respondents to the questionnaire included 201 corporations in North
America (combined sales of US$292 billion (SGD 406 billion)), 567 from Europe (US$452
billion (SGD 628 billion) sales), 196 from Asia-Pacific (US$59 billion (SGD 82
billion)), 67 from Latin America (US$15 billion (SGD 21 billion)) and 38 from Middle
East Africa (US$4 billion (SGD 5.6 billion)).
The new countries included in the study this year are China (Shanghai, Beijing,
Guangdong and Hong Kong SAR), Morocco, Taiwan and Turkey.
About The Centre For Retail Research
The third edition of the Global Retail Theft Barometer (ninth edition for Europe)
has been produced by Professor Joshua Bamfield, Director of the Centre for Retail
Inc. The CRR is an independent organization providing research and consultancy for the
retail sector dealing with the changing face of retailing and focusing on retail fraud
and crime. It has carried out extensive studies dealing with the costs of crime and the
application of electronic and computerized systems to combat shop theft and fraud in
many parts of the world.
About Checkpoint Systems, Inc.
Checkpoint Systems is a global leader in shrink management, merchandise visibility
and apparel labeling solutions. Checkpoint enables retailers and their suppliers to
reduce shrink, improve shelf availability and leverage real-time data to achieve
operational excellence. Checkpoint solutions are built upon 40 years of RF technology
expertise, diverse shrink management offerings, a broad portfolio of apparel labeling
solutions, market-leading RFID applications, innovative high-theft solutions and its
Web-based Check-Net data management platform. As a result, Checkpoint customers enjoy
increased sales and profits by improving supply-chain efficiencies, by facilitating on-
demand label printing and by providing a secure open-merchandising environment enhancing
the consumer's shopping experience. Listed on the NYSE (NYSE:CKP), Checkpoint operates
in every major geographic market and employs 3,900 people worldwide. For more
For additional information, please contact:
Natalie Chan, Asia Pacific Marketing Director
Tel: +852-2995-8332
Email: Natalie.chan@checkpt.com
SOURCE: Checkpoint Systems, Inc.
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