The UK is now officially the worst nation in Europe when it comes to theft from retail outlets. Only the global powerhouses that are the USA and Japan can beat us when it comes to a worldwide league table.
As if this wasn’t enough, the just-published figures suggest that the UK is now experiencing the biggest rise in theft by employees over the past year (of which more anon). Not good news, then, for the hordes of already-beleaguered retailers up and down the High Street.
The annual study carried out on behalf of sponsor Checkpoint by the Nottingham-based Centre for Retail Research relates to the 12 months up to and including June 2008, and is the most extensive report of its kind (surveying 920 of the world’s leading international retailers boasting combined sales of over GB pound 456 billion).
As ever, the comprehensive report has been expertly and skilfully pulled together by the Centre’s director, Professor Joshua Bamfield. Bamfield has researched retail crime issues since the mid-1980s, is the best respected practitioner in this arena and has been publishing the Global Retail Theft Barometer since 2000.
In conducting the survey, Bamfield sent out questionnaires to 3,900 major retailers in 36 different countries (the response rate being 23.6%). In addition to the UK, the USA and Japan, countries surveyed included France, Germany (and 21 other European nations), Canada, Mexixo, Brazil, Argentina, Australia, India, Singapore, Malaysia and South Africa. As always, results are presented using national figures rather than sample data.
Serious problem for the UK
Apparently, retail theft or ‘shrinkage’ (that’s stock loss due to crime and wastage) has posed a serious problem for the UK this past year, with GB pound 4 billion worth of stock going missing. Despite this declining slightly to represent 1.3% of annual sales turnover, the UK still harbours higher than the European average shrinkage levels of 1.27%. This, of course, is bad news for the hard-pressed consumer. Already in the vice-like grip of the credit crunch, they also now have to bear the brunt of this ‘social scourge’ (which is the equivalent of criminals taxing every household in Britain just under GB pound 200 every year).
As the economic doom and gloom casts a nasty shadow across the country and disposable income hits an all-time low, it comes as little surprise to learn that light-fingered customers and employees have been looking towards unlawful means in a bid to put their hands on the more desirable goods. In the UK, external theft perpetrated by opportunistic shoplifters and organised gangs accounted for 42.6% of all shrinkage. The average amount stolen by customers in Europe was GB pound 58, but rather more worrying is the amount now being lost to employee criminality.
After Ireland, the UK ranks as the worst nation in Europe for theft by dishonest members of staff – at present, 34% of all retail shrinkage originates from within. Average employee theft across Europe stands at a whopping GB pound 1,695. 70% higher than the global average, this reflects the seriousness of the large-scale fraud in our midst.
The largest source of loss generated by fraudulent employees across Europe was found to be merchandise theft. This has cost upwards of GB pound 2 billion and accounts for 30.4% of all internal fraud. Cash, coupons and vouchers represented the second most stolen items, this time costing retailers GB pound 1.8 billion and comprising 27.2% of all internal fraud.
Refund fraud and false price markdowns – the third largest source – cost retailers something in the region of GB pound 1.5 billion, while collusion and larger financial frauds weighed in at GB pound 825 million and GB pound 543 million respectively.
In the UK, the main sources of loss were estimated by retailers to be merchandise (accounting for GB pound 388 million), cash, coupons and methods of payment ( GB pound 346 million) and refund fraud coupled with false markdowns (totalling GB pound 279 million).
Reduced spend on security and loss prevention
Against the background of a troubled economy and with margins squeezed ever-tighter, loss from theft has been a tough cross to bear for retailers’ financial performance. This isn’t at all surprising given that, across Europe, retailers as a whole have reduced their spend on security and loss prevention by 4.9% when you compare the latest figures with those emanating from 2007.
Nevertheless, some GB pound 5.5 billion was invested in security and loss prevention by retailers across Europe. That’s equivalent to 0.34% of total retail sales racked up in the 12 months to last June. Of this, the amount spent by UK retailers on security measures weighs in at GB pound 785 million (including GB pound 251 million of capital expenditure). In this regard, we’re placed third behind France and Germany.
“Next year, retailers expect to be facing greater pressure from criminals, but have lower amounts of funding to combat the problem,” explained Professor Joshua Bamfield. “The recession may well provide those motivated towards crime with more time to steal and a greater incentive to do so, while at the same time the crisis facing the retail industry means there’s less and less money to spend on loss prevention measures.”
This year, off licences and liquor stores were the biggest losers in the fight against retail crime, with shrinkage as a percentage of turnover increasing by 6.3%. Increases were also reported by electrical goods and computer vendors (3.6%), discounters/cash-and-carry stores (2.6%), hardware/DIY merchants (2.3%) and department stores (2.1%). However, bucking the trend there has been some good news for supermarkets, jewellers and footwear/sports goods retailers, all of whom have successfully achieved a decrease in shrinkage levels (by 5.0%, 4.1% and 3.0% respectively).
Expensive, branded products that are in high demand have topped the thieves’ shopping lists. The most frequently stolen products – in order – are alcohol (specifically whisky, vodka and champagne), cosmetics and skincare products, womenswear, perfumes and fine fragrances, razor blades, DVDs and games, childrenswear, accessories, designer wear, high cost and speciality meat and fish.
No time to be blase
“In the current economic climate, retailers simply cannot afford to be blase about security,” urged Neil Matthews – vice-president and general manager of Checkpoint Systems in North and Central Europe (NCE), who fund the study by way of an independent grant – in conversation with SMT Online. “Inevitably, the less well-off people become, the more likely they’ll be to turn to crime. It’s not rocket science, but it’s essential retailers have the right controls in place to ease a pressure that’s only likely to become worse as we move into 2009. We’re already witnessing the effects of budget reductions. Potentially, the social and business implications of this are huge.”
Matthews continued: “Before the credit crunch hit, we were definitely identifying an overall shift in attitudes towards product protection. The issue was gradually moving up the Boardroom agenda and gaining the recognition it did – and does – deserve. I hope this recognition doesn’t now stagnate at a time when 100% attention is vital.”
According to Matthews, retailers should be looking at ways in which to increase sales in these difficult times, not how they can make up the deficit. “A high level of shelf availability and open merchandising certainly helps,” said Matthews, “but with an increased temptation for people to steal in the current climate, it’s certainly true to say that greater product protection is needed.”
With the Global Retail Theft Barometer 2008 stating that more than one third of the 50 most stolen lines are not specifically protected, it’s not unfair to say that retailers only have themselves to blame for such high shrinkage figures. However, of the items that were protected, 36% of them incorporated Electronic Article Surveillance (EAS) systems, 17.7% boasted hard tags and 10.4% were found to carry soft or paper tags, while 7.9% were protected by EAS source tagging applied during manufacture.
For a copy of the complete Global Retail Theft Barometer 2008 (ISBN 13:97884-612-6823-8), initial enquiries may be made to Penny Davies (e-mail: [email protected]) or Adam Craig (e-mail: [email protected]). Alternatively, telephone 020 7240 2444.
Further information is available by clicking the dedicated links provided on the right hand panel of this page.
