Shrink remains a significant operational challenge for retailers around the world, with loss rates ranging from 1% of sales in Japan to 1.6% in Mexico and Brazil. U.S. retail shrink has reached 1.5% of sales, according to the 2012-2013 Global Retail Theft Barometer from Checkpoint Systems and Euromonitor International, a global consumer research firm.
In total, shrink cost retailers more than $112 billion worldwide last year, representing an average 1.4% of global sales. Because of resulting expenses transferred to consumers, the cost of shrink to U.S. shoppers averaged $300 per household.
Increases in shoplifting and employee theft boosted loss rates in most countries. A significant challenge in all markets, according to the study, was the growing incidence of organized retail crime, particularly for high-value merchandise such as electronics and pharmaceuticals.
Other most-stolen merchandise included fashion accessories, jeans, footwear, lingerie/intimate apparel, consumer health products and mobile device accessories, such as cases and earphones.
Retailers that have committed to investments in loss prevention solutions said they managed shrinkage well, and typically reported shrink rates well below their respective country averages. Overall, retailers estimated their future loss prevention investments would increase or stay stable.
“Forward-looking retailers are deploying RFID-based solutions that combine protection with visibility at the item level,” said Per Levin, President and Chief Sales Officer of Shrink Management and Merchandise Visibility Solutions for Checkpoint Systems. “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.”
The study was based on phone and written survey interviews carried out in 16 countries. The 157 participating retailers operated a total of 160,000 stores representing $1.5 trillion in sales in 2012.
Readers can view a 3-minute video summarizing the data by clicking here. For a complete copy of the 142-page report, send an email to [email protected]. Retailers interested in participating in the Global Retail Theft Barometer 2013-2014 study may register here.