november 2007. the worldwide shrinkage survey worldwide shrink survey the global retail theft...

November 2007

THE WORLDWIDE SHRINKAGE SURVEY

Worldwide Shrink Survey

The Global Retail Theft Barometer 2008 is the most extensive survey of shrink ever undertaken

It is the unique worldwide survey

The objective is to give retailers comparative information about the shrink situation at a global level

The survey was carried out by the Centre for Retail Research, led by Professor Joshua Bamfield


A survey that responds adequately to the global nature of the retail business today

An opportunity to benchmark across different regions, countries and sectors

A chance to identify and understand trends in specific regions of the world

Why Global?




3.900 questionnaires were sent out to the Loss Prevention or Security Vice President or Chief Security Officer of retail corporations in 36 countries around the world including for the first time South Africa, Argentina, Brazil, Mexico and Malaysia

920 retail companies running 115.612 retail outlets with combined sales of 554.334 M€ responded the questionnaire

Satisfactory response rate of 23,6%

36 countries surveyed



32,68 M€29,90 M€

10,05 M€

3,68 M€0,45 M€

0

10

20

30

40

North America Europe Asia-Pacific Latin America Africa

Global Costs of Crime includingCosts of Loss Prevention

(in million €)

Total global shrinkage + loss prevention 76.749 M€

(73.616 M€ in 2007)


Shrinkage Rates

20 of the 36 countries increased shrinkage

14 countries reduced shrinkage

In 2 countries the average shrinkage rate did not change

Globally, this year shrinkage fell of -1,5% on average

Countries with the highest shrinkage rates: India, Mexico and Thailand

Japan, Austria and Switzerland had the lowest rates


Average Shrinkage Rates

0,0%

0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

Jap

an

Aus

tria

Sw

itzer

lan

d

Ger

man

y

Ave

rag

e A

sia-

Pac

ific

Den

mar

k

Th

e N

eth

erla

nds

Sin

gap

ore

Po

rtug

al

Ave

rag

e W

este

rn E

uro

pe

Ave

rag

e E

uro

pe

Italy

No

rway

Fin

land

Un

ited

Kin

gdom

Sp

ain

Gre

ece

Slo

vaki

a

Glo

bal A

vera

ge

Sw

eden

Bal

tic S

tate

s

Bel

giu

m/L

uxem

burg

Irel

and

Po

lan

d

Ave

rag

e C

entr

al E

uro

pe

Fra

nce

Cze

ch R

epub

lic

Hun

gar

y

Aus

tral

ia

Can

ada

U.S

.

Arg

entin

a

Ave

rag

e N

ort

h A

mer

ica

Ave

rag

e S

out

h A

mer

ica

Bra

zil

Mal

aysi

a

So

uth

Afr

ica

Th

aila

nd

Mex

ico

Ind

ia

Per

cen

tag

of

Sal

es


Sources of Global Retail Shrinkage ‘08

0% 10% 20% 30% 40% 50% 60%

Europe

Asia-Pacific

Africa

Latin America

North America

Proportion of Shrinkage

Customers Employees Suppliers-Vendors Internal Error


Apprehended Thieves

Number of Thieves Apprehended by Retailers 2008CUSTOMER THIEVES EMPLOYEE THIEVES

Number of Thieves

Average amount stolen per incident

Number of Thieves

Average amount stolen per incident

Combined Totals

North America 1.447.046 509 € 689.546 947 € 2.136.592

Percentages 67,7% 32,3% 100%

Latin America 145.154 49 € 15.655 280 € 160.809

Percentages 90,3% 9,7% 100%

Africa 10.937 24 € 1.183 458 € 12.120


Asia-Pacific 120.681 46 € 18.693 269 € 139.374

Percentages 86,6% 13,4% 100%

Europe 2.758.700 74 € 89.381 2142 € 2.848.081


Global totals 4.482.518 223 € 814.458 1.254 € 5.296.976

Global Percentages 84,6% 15,4% 100%

The amount recovered by apprehending thieves was 2.042 M€


Most-Stolen Merchandise by Vertical Market


Consumers

The global cost of retail crime (stock loss from crime plus the costs of loss

prevention) represented an annual ‘tax’ on honest consumers globally of:

157 € per household

or

48,50 € per person



Organized Retail Crime

Customer theft, including shoplifting and organized retail crime (ORC) caused the greatest shrinkage loss in most countries, a total of 29.283 M€ (41,2% of total shrinkage)

The increase in the significance of customer theft in North America is thought to be caused by organized retail crime, a growing problem which may spread globally

Very popular products like the early Harry Potter books, Nintendo games, recent DVD films etc. reach a loss of up to 8%

Nearly one third (30,3%) of the most-stolen merchandise was not protected

EAS hard tags were used on 16,9% of items, soft tags on 12% and 9,4% of the lines were protected by EAS source tagging

The Shadow Threat


Results for Europe


Europe

502 European retailers responded, running 36.199 stores, representing a combined total of 283.098 M€ in retail sales

In the12-month-period leading to June 2008, the average shrink rate rose by 0,8% from 1,26% to 1,27%)

Shrinkage cost retailers 27.438 M€, an increase of 279 M€ compared to last year


Europe

In the survey Europe is split into

- Western Europe (Austria, Belgium, Luxemburg, Denmark, Finland, France, Germany, Greece, Ireland, Italy, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom)

- Central Europe (Czech Republic, Hungary, Poland, Slovakia, Baltic States)


Europe

Retail theft (as % of sales) in Europe was 1,27% (vs. 1,34% global)

In Western Europe the average was 1,26%

The average rate in Central Europe was 1,36%



European Retail Shrinkage 2008

EUROPETotal Shrinkage 2008

(Million €)Shrinkage 2008 (as % of sales)

Shrinkage 2007 (as % of sales)

Percentage change2007-08

Austria 430 1.01% 0.94% 7.4%

Belgium/Luxembourg 770 1.36% 1.33% 2.2%

Denmark 341 1.20% 1.20% 0.0%

Finland 381 1.30% 1.32% -1.5%

France 4.414 1.37% 1.34% 2.2%

Germany 4.674 1.13% 1.10% 2.7%

Greece 471 1.32% 1.36% -3.0%

Ireland 415 1.36% 1.33% 2.2%

Italy 2.977 1.28% 1.23% 4.1%

The Netherlands 1.059 1.20% 1.24% -3.2%

Norway 406 1.28% 1.26% 1.6%

Portugal 320 1.26% 1.31% -3.8%

Spain 2.510 1.31% 1.28% 2.3%

Sweden 560 1.35% 1.32% 2.3%

Switzerland 573 1.01% 0.96% 5.2%

United Kingdom 5.049 1.30% 1.34% -3.0%

Western Europe 25.388 1.26% 1.25% 0.8%

Czech Republic 326 1.38% 1.41% -2.1%

Hungary 317 1.38% 1.36% 1.5%

Poland 1.103 1.36% 1.34% 1.5%

Slovakia 122 1.32% 1.30% 1.5%

Baltic States (Latvia, Estonia, Lithuania) 182 1.35% 1.42% -4.9%

Central Europe 2.050 1.36% 1.36% 0.0%

Western and Central Europe 27.438 1.27% 1.26% 0.8%

Global 71.184 1.34% 1.36% -1.5%


European Retail Shrinkage 2000-08

Shrinkage Rate (% of sales)


Sources of Retail Shrinkage - Europe

Internal Error4.408 M€

16%

Suppliers1.771 M€

6,5%

Employees8.425 M€

30,7%

Customers12.834 M€

46,8%


Sources of Theft – Europe

Customer thieves and organized gangs were the largest single cause of retail shrinkage in Europe. Customer thieves thought to be responsible for 46,8% (12.834 M€)

The next largest was dishonest employees, estimated to cause 30,7% of retail losses (8.425 M€)

The rise in the share of shrinkage caused by employee theft was 2,1% compared to 2007

The average value stolen or admitted by employee thieves in Europe (2.142 €) was almost triple the average stolen by customer thieves (73,50 €), emphasising the need for preventing employee theft as well


Loss Prevention Costs – Europe

European LP spending as a percentage of sales is 0,34% (6.899 M€) Global LP spending as a percentage of sales is 0,33% (17.351 M€)

Direct employees1.345 M€

19,6%

Contract employees2.512 M€

36%

Cash collection522 M€7,6%

Security equipment2.091 M€

30%

Other400 M€

6%


Protection Methods – Europe

The 50 most vulnerable product lines in Europe are protected by:

Electronic Article Surveillance: 36% (of which 7,9% are source tagged) Locked cabinets and shelves: 9,9% Keepers/safers and locked boxes: 7,2% Chains, cables and loop alarms: 6,1% Dummy cartons or ticket systems: 4,5% Other protection device: 1,8%

More than one third (34,5%) of lines were not protected (global average = 30,3%)

68,7% of European retailers have store audit programs in place, to ensure that agreed corporate policy for loss prevention and security is carried out in stores


Shrink by Vertical Markets – Europe

EUROPE

2008 2007 Change

vehicle parts/hardware/DIY/building materials retail 1.75% 1.71% 2.3%

apparel/clothing and fashion/ accessories 1.70% 1.69% -0.6%

books/newspapers/stationery 1.66% 1.69% -1.8%

convenience stores/ natural & speciality foods 1.66% 1.64% 1.2%

cosmetics/ perfume/ health & beauty/pharmacy 1.52% 1.53% -0.6%

department store or large general store 1.46% 1.43% 2.1%

video/ music/ games software 1.38% 1.36% 1.5%

supermarket/ hypermarkets/ large grocery 1.15% 1.21% -5.0%

office products 1.10% 1.08% 1.9%

jewellery/ watches 0.92% 0.96% -4.1%

electrical goods/ computer centre/ electronics store 0.85% 0.82% 3.6%

liquor, wine beer/off-licence 0.85% 0.80% 6.3%

furniture/ textiles/ floor & window coverings/ 0.81% 0.83% -2.4%

toys and games/ hobby and craft 0.76% 0.75% 1.3%

discount/ variety retail/ warehouse clubs 0.74% 0.76% 2.6%

footwear/ shoes/ sports goods & sporting goods 0.65% 0.67% -3.0%

Totals 1.27% 1.26% 0.8%

Local Information Contact

november 2007. the worldwide shrinkage survey worldwide shrink survey the global retail theft...

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