The cost of retail crime in the UK in the last year topped 4.3 billion (6.4 billion) and is the highest value in Europe, according to the sixth European Retail Theft Barometer (ERTB) published by the Centre for Retail Research and Checkpoint Systems Europe. UK consumers are bearing the brunt of this social scourge, which is the equivalent of criminals taxing every household in the UK 174.35 (260) per year set against an average of 147.53 (220) across Europe.
Retail theft or shrinkage (stock loss from crime and wastage) is a serious issue for retailers, with 19.5 billion (29 billion) worth of stock lost across Europe in the last 12 months alone, representing 1.24% of total turnover. According to this latest report issued by Checkpoint Systems the global leader in Radio Frequency (RF) based shrink management solutions UK retailers reported a total loss of over 3.8 billion (5.7 billion) due to customer, employee and supplier theft and internal reporting errors. Despite this being the largest deficit across Europe, shrinkage in the UK continues to decrease and in 2006 it fell by 3.6% to represent 1.33% of turnover. This is down from 1.77% in 2002 and has resulted in the UK no longer having the highest shrinkage rate in Western Europe, dropping behind Portugal and Finland at 1.34% for the first time.
Customer theft, which includes opportunistic shoplifters and organised gangs, still accounts for the largest loss of stock for UK retailers resulting in 43.3% of all shrinkage. However it is the growing area of staff theft that most concerns the UKs retail industry, with 38% of all shrinkage coming from within. This is in sharp contrast to the rest of Europe, where customer theft is seen as the main driver of shrinkage with an average of 48.8% (9.4 billion/14 billion) and staff theft a lesser, but growing problem at 30.7% (5.9 billion/8.9 billion).
With margins under increasing pressure within the retail industry, loss from theft becomes increasingly important in a retailers overall financial performance. As such, the European
Retail Theft Barometer has seen an increase of 28% in spending on security and crime prevention since 2002 in Western Europe. Last year alone, an additional 239 million (356 million) was invested by retailers, bringing the total to over 5.3 billion (7.9 billion) across Europe. The UK is one of the countrys leading the way in the fight against crime, spending 976.8 million (1.45 billion) in security measures in 2006 second only to Germany at 1.01 billion (1.48 billion).
Non-food retailers, such as books and stationery outlets, recorded the highest levels of shrinkage in 2006, with nearly 2% of turnover (up 12.4% on 2005), followed by clothing and textile stores (1.66% of turnover, up 1.2%), food specialists (1.44%, down 0.7%) and department stores (1.38%, up 2.2%). Supermarkets and hypermarkets were one of the biggest winners against crime in 2006, with shrinkage falling by 10.1% to now represent just 0.71% of turnover.
Small items that are easily secreted on your person or sold on without difficulty are top of the thieves shopping list according to this years European Retail Theft Barometer. The most frequently stolen products, in order, are womens wear, perfumes and fine fragrances, designer wear and shoes, razor blades, cosmetics and skin care, alcohol, DVDs, menswear, video games, electrical goods including laptops, MP3 players, TVs, mobile phones and software. Despite this, the report has found that 40.6% of the most stolen items remain unprotected.
Shrinkage can often be viewed as simply a cost of doing business, said David Nuttall, Managing Director of Checkpoint Systems (UK). But as the report clearly demonstrates the social and economic impact of turning a blind eye is immense. Retailers simply cannot afford to ignore the problem, it is not going to go away and is costing every person in the UK a staggering 72.39 a year.
Shrinkage is definitely moving up the boardroom agenda and the commitment shown by retailers in investing in security measures to combat crime has started to pay off shrinkage is at its lowest level in the UK since 2002. However, this can also be attributed to the advances made in introducing smart new ways to increase effectiveness through solutions like advanced data analysis software and source tagging, added David Nuttall.
EAS (electronic article surveillance) continues to be the most common and important type of protection utilised by retailers to combat shrinkage, being used on an average of 35.9% vulnerable product lines. But it is advances in EAS source tagging that is seen as the way forward in combating shrinkage throughout the supply chain. Many retailers are already developing source tagging programmes, with 43.5% of the reports respondents currently protecting at source and a further 30.4% expecting to be doing so within two years.