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UK retailers lost £2.7 billion to shrinkage in 2013

UK retailers lost £2.7 billion to shoplifting, employee theft, internal fraud and administrative errors in the last year.

Shrinkage, comprised of shoplifting, employee theft, vendor or supplier fraud and administrative errors cost the retail industry more than £81 billion worldwide in 2013, £2.7 billion in the UK alone.

The report was carried out in 2014 by The Smart Cube and Ernie Deyle, a retail loss prevention analyst, based on surveys conducted in 24 countries among 222 retailers representing £475 billion in sales.

The average cost of retail crime per person across the 24 countries surveyed, which unlike shrinkage is based on dishonest employees, shoplifters, fraudulent suppliers plus the cost of loss prevention, ranged from £46 to £338. The annual cost of retail crime to UK shoppers averaged £80 per person.

Loss prevention investments are costing retailers £3.3 billion to keep shrink down and according to the study, shrink is down slightly in most countries. The lowest shrink rates were recorded in Norway (.83% of retail sales), followed by Japan and the UK (.97%). The US came in at 1.48% of retail sales, down slightly from 1.50% in 2012. The highest rates were recorded in Mexico (1.70%) and China (1.53%).

While shoplifting remains the biggest cause of all retail shrink in 16 of the 24 countries surveyed, in the UK, administrative and non-crime losses ranked first at 36.5%, with shoplifting next at 25.3%.

The most stolen items across Europe are products that were easy to conceal and with a good resale value, including fashion accessories and wine and spirits. Other frequently stolen products included power tools, mobile accessories and make-up products.

Source tagging, the use of applying EAS or RFID labels prior to arriving at retail stores, has increased globally according to respondents. Currently used on high value and high theft items such as meat, health and beauty products and alcohol, 80% of UK retailers are source-tagging between 0-10% of products and a further 20% source-tagging over 20% of all merchandise. In addition, 50% of European retailers plan to increase the number of sources tagged SKUs.

Per Levin, president and chief sales officer, shrink management & merchandise visibility solutions for Checkpoint Systems said: “Our hope is that retailers can learn more about the causes of shrink and work with their suppliers and solutions partners to create joint programs to reduce shrink and associated costs.”

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