Shrink—comprised of shoplifting, employee or supplier fraud, organized retail crime and administrative errors—cost the retail industry more than $112 billion globally last year, according to the 2012-2013 Global Retail Theft Barometer, and represented 1.4 percent of retail sales, on average.
The study, underwritten by an independent grant from Checkpoint Systems Inc., was undertaken in 2013 by Euromonitor International, and was based upon phone and written survey interviews conducted in 16 countries among retailers covering 160,000 stores representing $1.5 trillion in sales in 2012.
According to the study, shrink is on the rise in most countries with increases noted in shoplifting, employee theft and organized retail crime. The lowest shrink rates were recorded in Japan (1 percent of retail sales), followed by Hong Kong, Australia and Germany (1.1 percent). The United States came in at 1.5 percent of retail sales. The highest rates were recorded in Brazil and Mexico (1.6 percent). Global retailers blamed lagging economic recoveries and organized retail crime for high theft rates.
Among the most stolen merchandise reported by the retailers were fashion accessories, jeans, footwear and lingerie/intimate apparel, high-value electronics, consumer health such as allergy treatments, milk formula, electronic games, satellite navigation/GPS, mobile device accessories such as cases and earphones.
Retail respondents with particularly strong investments in loss prevention told researchers they believe that they manage shrinkage well, and typically reported shrink rates well below the respective country average, with investments clearly paying off. In fact, U.K. and German retailers stated that improving loss prevention methods helped them to keep shrink under control. Overall, retailers interviewed estimated their future loss prevention investments would increase or stay stable.
According to Euromonitor International, "Shrink is a multi-dimensional threat for retailers across the globe, with shoplifting and employee theft, including organized crime, on the rise. Growing shrink concerns have put loss prevention high on the agenda of retailers; companies are keen to invest in effective and proven loss prevention methods, collaborating with technology companies and specialists for loss management solutions to diminish these shrink problems."
"Some retailers still have a way to go by expanding existing loss prevention solutions providing a sure return on investment to reduce theft. Forward-looking retailers are deploying RFID-based solutions that combine protection with visibility at the item level. 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," said Per Levin, president and chief sales officer for shrink management and merchandise visibility solutions at Checkpoint Systems.