The UK Retail Fraud Survey 2016 has revealed that retailers have lost £2.34 billion to shrinkage in just 12 months.
Shrinkage is the difference between recorded and actual inventory. It can be attributed to factors including employee theft, shoplifting, administrative error, vendor fraud, damage in transit or in-store and cashier errors that benefit the customer.
Employee theft was identified as the single biggest cause, with 68% of retailers citing it as their top area of loss.
The study covers retail transactions accounting for some 32% of all UK retail sales online and offline through 34,950 stores across the UK.
Shrinkage rates vary by retail sector, from mass merchants and department stores at 2.68% of sales, to 0.25% of sales for hospitality and leisure retailers. But mass merchants and department stores have seen a massive increase in shrinkage rates since last year of 58%, while hospitality and leisure retailers have seen a decrease of 38%.
The study is published by Retail Knowledge, and sponsored by global inventory and data collection services company WIS International,
Paul Bessant of Retail Knowledge commented: “Over the past few years the retail landscape, with the advent of omni-channel retail, has changed beyond all recognition, and with it, so has Loss Prevention [LP: a set of practices employed by retail companies to prevent the loss of inventory or monies]. The nature of threats with which the LP department is now expected to deal with has changed too.
“With this redrawing of the lines of risk, comes increased responsibilities for those who traditionally confined themselves to a narrower LP function, as well as greater opportunity to support and contribute to the business. The signs are that these new approaches are working well, as you will see by this year’s shrink figure and the survey on the whole. However, it is also clear that there is no room for complacency.”
Steve Simmonds of WIS International added: “The survey provides a unique insight into what issues are emerging in the world of retail risk and loss prevention and allows retailers to both benchmark their own performances as well as prioritise areas where others are already being challenged and they may well be too. It also allows those who supply solutions to the risk and loss prevention market to better understand where challenges are being posed, and to help produce solutions most relevant to a constantly evolving market place.”