A fall in shrinkage shouldn’t lead to complacency, especially with the rise in VAT scheduled for 2011, says Neil Matthews


The past few years have been tough for retail, with the recession hitting sales and playing a role in increasing theft. So it is pleasing to see that the latest edition of the Global Retail Theft Barometer reported a 5.8% fall in shrinkage across UK retailers over the past year.

Following a peak in shrinkage in 2009, this year's figures highlighted that retailers increased their loss prevention spend. Large grocery stores have been most successful at tackling loss, with shrinkage falling by 8% as a percentage of sales.

But theft and supplier fraud/errors are still costing retailers a significant amount £4.4bn from 1 July 2009 to 30 June 2010 and shoplifting is once again the biggest problem, accounting for almost 43% of retail shrinkage. More than a third of loss in the UK retail industry is down to dishonest employees, significantly more than the 29.8% European average and greater than in 2009.

While larger retailers have seen improvements in shrinkage, crime remains a problem for convenience and speciality food stores who continue to lose 1.77% of sales to criminals. So while UK stores may be spending more than any other European country on protecting merchandise £970m this year smaller retailers need a more strategic approach to loss prevention.

Over the past year, more than 90% of retailers have implemented employee training to spot and deter thieves, 32% have increased loss prevention spend, while 23% are hiring more security. While it is not always possible for smaller retailers to implement these practices, it is important to understand which items are at highest risk from thieves. Most recently, alcohol, fresh meat, cheese, seafood and beauty products have been most at risk.

With the VAT rise looming at the start of 2011, bringing with it a 2.5% increase in the cost of merchandise, it is important for retailers to be aware of a potential increase in crime at the beginning of the year.

I, for one, am delighted that retailers are fighting shrinkage and have no doubt that staff training and better loss prevention technology will help secure a successful future.

Neil Matthews is vice president, northern, central and Easter Europe, Checkpoint Systems.