MEDIA RELEASE PR37007
Study Finds Retail Theft Reached THB 3,839 Billion (US$115 Billion) World-wide
HONG KONG, Nov. 17 /PRNewswire-Asia-AsiaNet/ --
-- Recession and reduced loss prevention spending lead to largest increase
in shrink since study's inception
-- Global shrink average rises by nearly 6% reaching 1.43% of retail sales
-- Cost of theft/ honest tax equal to an average of US$120.17 (THB 4,011)
per family in Asia Pacific
-- Apparel theft in accessories and fashion clothing reached 3.85% of
sales, while meat theft in Supermarkets hit 3.38%
-- Security spending as percentage of sales was the lowest in Thailand
(0.13%) while shrinkage rate (1.66%) was the 2nd highest among countries
in Asia Pacific. Shrinkage in Thailand reached US$ 1,062 million (THB
35 billion).
The level of global retail theft reached US$114.8 billion (THB3,832 billion) in 2009, representing a significant
increase of 5.9% over last year's total of $104.5 billion (THB 3,488 billion), according to the third edition of the
Global Retail Theft Barometer. The study monitored the costs of shrinkage and crime in the global retail
industry between July 2008 and June 2009, and found that the rise in shrink occurred in all regions surveyed,
with the greatest increase in North America (+8.1%), Middle East-Africa (+7.5%), Europe (+4.7%) and Asia
Pacific (+4.2%).
In Thailand, shrinkage as percentage of sales increased by 4.4% to US$ 1,062 million (THB 35 billion). It
represented 1.66% of retail sales, which was also the second highest shrinkage rate among 9 countries
surveyed in Asia Pacific.
"Retailers attribute one third of the increase in shoplifting to the economic recession," noted Professor
Joshua Bamfield, Director of the Centre for Retail Research and author of the study. "Many have also noted a
change in the type of offender and in the type of products stolen."
"While most businesses have suffered as a result of the recession, few have been as hard-hit as the retail
industry," said Rob van der Merwe, Chairman, President and CEO of Checkpoint Systems, Inc., the sponsor of
the study. "While retailers have had to cut budgets in most areas, this year's study shows the adverse effect of
cutting spending too deeply in the area of loss prevention. Prudent spending in this area can have a very
positive effect on bottom-line numbers, and act as a force-multiplier, especially as budgets for training
programs and security personnel are reduced."
"The 2009 study also found that retailers decreased their spending on loss prevention and security by
US$900 million (THB 30 billion), no doubt in response to their general need to trim budgets in tough times,"
continued Professor Bamfield. "However, the correlation between US$900 million (THB 30 billion) in
decreased security spending and a US$10 billion (THB 333.8 billion) increase in theft is very significant. It
highlights the importance of continued advancement and improvement of loss prevention programs, as
reducing theft is key to the success and growth of retailers' businesses."
Loss prevention spending in 2009 was equivalent to an average of 0.31% of retail sales.
Global Retail Shrinkage Rates
Compared to last year's survey, the losses of retailers in the 12-month period year ending June 2009 rose in
38 out of the 41 countries surveyed. Shrinkage, as a percentage of retail sales rose by 5.9 percent this year to
a global average of 1.43%. This is a significant departure from the previous two years, in which shrink as a
percentage of retail sales decreased.
While North America and Europe make up 40% and 38.4%, respectively, of global shrinkage, the highest
country-specific rates were found in India, Morocco and Mexico and the lowest in Hong Kong, Taiwan and
Austria.
"Although there are commentators that view retail crime as a harmless or intriguing social phenomenon or
simply as a 'cost of doing business', this ignores the impact of the cost of retail crime to the general public,
which, in 2009 cost 553 million families in the 41 countries surveyed an extra US$208 (THB 6,943) on their
shopping bill," said Professor Bamfield.
In Asia Pacific, the honest tax imposed to each family as a result of retail crime was US$120.17 (THB
4,011).
Shrinkage by Global Vertical Markets
Shrinkage varies according to business type, vertical market and country. In 2009, some of the highest
average shrinkage rates were found in apparel/clothing and fashion/accessories (1.84%) or
cosmetics/perfume/beauty supply/pharmacy (1.77%).
In apparel/clothing and fashion, the highest shrinkage losses were seen in accessories (3.85%) and in
fashion/tailored clothing (3.64%). These product groups suffered the highest shrinkage in all regions surveyed
(North and Latin America, Europe, Asia-Pacific and Middle East-Africa). A little difference was that footwear
was also one of the high-risk product lines in Asia Pacific, which accounted for 1.61% of shrinkage rate.
For food items/groceries, the highest shrinkage was reported in fresh meat with 3.38%, which is two and a
half times more than the global shrinkage rate of 1.36% for foodstuff. Luxury cooked meats also reached a
high shrinkage rate of 2.72%. High-quality seafood was the top high-risk product lines in Asia Pacific, which
accounted for 2.13% of shrinkage rate.
Global Cost of Retail Crime
In the 2009 edition of the survey, the global costs of retail crime (the charge that crime imposes on retailers)
was US$120.5 billion (THB 4,022 billion) including loss prevention costs. It is made up of shoplifting losses
(40.5 percent), employee theft (33.8 percent), supply chain losses (5.3 percent) and loss prevention costs
(20.3 percent).
While shrinkage has increased, security spending has decreased almost everywhere. In more mature
markets, such as North America and Europe, loss prevention expenditure tends to be higher than in emerging
markets. In North America, loss preventing spending represented 0.40% of retail sales, a fall of US$811
million (THB 27 billion) from 2008. In Europe retailers spent an equivalent to 0.29% of retail sales compared to
0.34% in 2008
In Asia-Pacific the average for security spending was 0.17%. It is the lowest among all the regions
surveyed.
"It is interesting to note that spending on security systems and equipment fell by a much greater amount
than spending on outsourced security personnel," commented Bamfield. "While a combination of several
approaches to security is most effective, there are definite advantages to increase the effectiveness of
personnel by employing a comprehensive shrink management solution and strong loss prevention processes.
In Thailand, the security spending (0.13%) as percentage of sales was the lowest in Asia Pacific. It was
even lower than the Asia Pacific average of 0.17% and global average of 0.31%.
Merchandise Theft
Merchandise theft reached a total of US$64.51 billion (THB 2,150 billion) in 2009. The amount of
merchandise stolen by shoplifters and employees represents 72% of the total shrinkage. Most merchandise
was stolen by shoplifters, who were responsible for US$48.8 billion (THB 1,629 billion) of stolen goods. It is
here that loss prevention can have its greatest impact by deterring would-be shoplifters and enabling
merchandise recovery.
Economic Recession Impact
"There is some criminological evidence that crime rises as unemployment rises and there are indications
that crime is a much more important issue for retailers now than two or three years ago," said Professor
Bamfield.
"Some offenders may otherwise face real hardship. People whose family income has fallen because of
unemployment or work-sharing may feel that they need to steal in order to maintain their previous lifestyle.
The failure of the financial system and the political class in many countries has disillusioned many people, who
may feel that they have to look after their own interests - however illegally - because no one else can be
trusted to do so," continued Bamfield.
The survey shows that shrinkage and offending have increased over the past year, and that retailers
attribute one-third of increased shoplifting, and a little more than one-fifth of increased employee theft, to the
recession. "It seems that the pattern of offending has altered. This is likely to be truer of shoplifting than of
employee theft as employees are more eager to retain their jobs when there are fewer jobs available," said
Bamfield.
Most Vulnerable Merchandise
Thieves tend to focus on small and easily-concealed, expensive, branded items that have considerable
popular appeal and are easily re-sellable: electronic games/Wii, DVDs/entertainment, iPods/MP3 players,
clothing, cosmetics/face creams/perfumes, alcohol, fresh meat/expensive foodstuffs, which appear most
frequently on the list of most vulnerable merchandise. Other most-stolen products are razor blades/shaving
items, mobile/cell phones and watches.
Apprehension of Thieves
The number of shoplifters and employee thieves apprehended by retailers amounted in 2009 to 5.8 million -
the size of many countries - an increase of 500,000 compared to the previous year. This increase may be due
in part to the overall increase in crime. Of those apprehended, 85.6% were shoplifters and 14.4% employees.
In Asia Pacific, the average amount stolen or admitted by shoplifters was US$69.27 (THB 2,312). The
average employee theft was US$376.15(THB 12,555) compared to US$1,889.02 (THB 63,055) of global
figure.
Loss Prevention and Innovation
"The recession makes loss prevention a more difficult task, but also more important," said Per Levin,
President, Shrink Management Solutions, Checkpoint Systems. "While 5.8 million theft-incidents were stopped
and nearly US$6 billion (THB 200) in stolen merchandise was recovered in 2009, it was not enough to keep
shrinkage from spiking. But there are still quick wins available. For example, 28 percent of products that are
most attractive to thieves remain unprotected. We have seen significant innovation taking place in the industry,
and there are new and effective solutions available today, from comprehensive product protection strategies to
state-of-the-art shrink management systems. When brought together in a holistic fashion they can help
retailers protect their businesses and prepare for profitable growth"
In Asia Pacific, 34.2% of the top 50 most-stolen product lines remained unprotected.
"With numerous studies supporting the conclusion that investing in and focusing on Loss Prevention
decreases retail shrink, we hope this year's Global Retail Theft Barometer provides the data retailers need to
support their loss prevention efforts," concluded Professor Bamfield.
The Survey
Started in 2001, the Global Retail Theft Barometer (GRTB) is an annual survey conducted by the Centre for
Retail Research in Nottingham, UK and sponsored by Checkpoint Systems. This study is now the largest and
most comprehensive survey of retail theft and crime in the world.
The Study covered 1,069 corporations with total revenue of US$ 822 billion (THB 27,438 billion).
Respondents to the questionnaire included 201 corporations in North America (combined sales of US$292
billion (THB 9,747 billion)), 567 from Europe (US$452 billion (THB 15,088 billion) sales), 196 from Asia-Pacific
(US$59 billion (THB 1,969 billion)), 67 from Latin America (US$15 billion (THB 501 billion)) and 38 from Middle
East Africa (US$4 billion (THB 134 billion)).
The new countries included in the study this year are China (Shanghai, Beijing, Guangdong and Hong Kong
SAR), Morocco, Taiwan and Turkey.
About The Centre For Retail Research
The third edition of the Global Retail Theft Barometer (ninth edition for Europe) has been produced by
cooperation of Checkpoint Systems, Inc. The CRR is an independent organization providing research and
consultancy for the retail sector dealing with the changing face of retailing and focusing on retail fraud and
crime. It has carried out extensive studies dealing with the costs of crime and the application of electronic and
computerized systems to combat shop theft and fraud in many parts of the world.
About Checkpoint Systems, Inc.
Checkpoint Systems is a global leader in shrink management, merchandise visibility and apparel labeling
solutions. Checkpoint enables retailers and their suppliers to reduce shrink, improve shelf availability and
leverage real-time data to achieve operational excellence. Checkpoint solutions are built upon 40 years of RF
technology expertise, diverse shrink management offerings, a broad portfolio of apparel labeling solutions,
market-leading RFID applications, innovative high-theft solutions and its Web-based Check-Net data
management platform. As a result, Checkpoint customers enjoy increased sales and profits by improving
supply-chain efficiencies, by facilitating on-demand label printing and by providing a secure open-
merchandising environment enhancing the consumer's shopping experience. Listed on the NYSE
(NYSE:CKP), Checkpoint operates in every major geographic market and employs 3,900 people worldwide.
For additional information, please contact:
Natalie Chan, Asia Pacific Marketing Director
Tel: +852-2995-8350
Email: Natalie.chan@checkpt.com
SOURCE: Checkpoint Systems, Inc.
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