Retail loss from theft, fraud and error increases by over 6 percent in the UK

The Global Retail Theft Barometer (GRTB) is an annual survey conducted by the Centre for Retail Research in Nottingham, UK underwritten through an independent grant from Checkpoint Systems. This study is the largest and most comprehensive survey of retail theft and crime in the world. The study covers key trends in retail shrinkage and crime in 43 countries and regions across the world

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 shows that the total amount lost by British retailers from theft, fraud and error – evaluated as a percentage of sales – has increased by 6.2% in the last 12 months.

Whilst 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.

Neil Matthews, Vice President, Northern, Central and Eastern Europe at Checkpoint Systems, explained: “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, thieves are estimated to have stolen £79 per shopping spree, demonstrating that the typical theft was more likely to be branded merchandise that could be resold for a profit. This is reinforced by the fact that clothing and apparel, reported the highest losses at 1.86% of sales. Within this category, accessories, outerwear and tailored clothing came in at the top, accounting for 3.72%, 2.82% and 2.40% respectively, of total retail losses. Natural and speciality foods also reported high levels of loss as did cheese (3.90%) which experienced more than double the global amount lost of 1.29%. Meanwhile in other high-risk categories – health and beauty – loss of items such as mascara, eyeliner and eye shadow increased to 2.37%.

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 amongst 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 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 is 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.

However, whilst 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 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,“added Professor 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.”