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November 11, 2009

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The 2022 State of Physical Access Control Report

India tops retail shrinkage rate

India has earned the dubious distinction of having the highest country-specific retail shrinkage rate — reduction or loss in inventory due to shoplifting, employee theft– across the world for year ended June 2009, according to the Global Retail Theft Barometer. This is for the second year in a row, retailers in country found facing highest incidence of shoplifting and employee theft.

India, the fifth largest retail destination globally, is also the most susceptible to menaces such as shoplifting and employee theft among others, said the survey.

The country witnessed the highest ‘shrinkage rate’ at 3.2 per cent of sales. This amounts to a shrinkage loss of $2.6 billion, “equivalent to $156.22 honest tax per family,” according to the survey conducted by Britain’s Centre for Retail Research, with funding from Checkpoint Systems, a company supplying technology solutions to the retail industry.

The study, that covered 41 countries, based on a survey of over 1,000 retailers, monitored the shrinkage rate – and the cost of shrinkage – in the global retail industry between July 2008 and June 2009. India’s shrinkage went up from 3.1 per cent of sales last year to 3.2 per cent of sales this year, representing an increase of $82 million.

Shoplifting: Biggest bane

According to the survey, shoplifting was the biggest cause of retail shrinkage (45.2 per cent) in India, while employee theft was the second-largest (23.3 per cent). Administrative errors contributed to 22.6 per cent of the losses.

According to a Business Standard report, the most-stolen merchandise in India were small, expensive & “mobile” items, such as electronics, cosmetics, alcohol, food, clothing and jewellery. The expenditure on security in India, at $158 million, represents 0.19 per cent of retail sales, which is lower than the global average of 0.31 per cent.

The survey also found a rise in shrinkage in all regions surveyed, with North America accounting for the greatest increase of 8.1 per cent, followed by West Asia-Africa (7.5 per cent) and Europe (4.7 per cent).

The other countries showing high shrinkage are Morocco, at 1.79 per cent, and Mexico, at 1.75 per cent. The lowest rates of shrinkage were found in Australia (0.99 per cent), Hong Kong (0.92 per cent) & Taiwan (0.89 per cent).

India’s retail sector has been growing at about 30-40 percent annually over the past decade, according to research firm KPMG. Though the growth rate projections now stand lowered, it is still seen as a sector with immense potential.

For Asia-Pacific the average for security spending was 0.17 per cent, lowest among all the regions surveyed. Whereas, the average amount stolen or admitted by shoplifters was USD 69.27, average employee theft was USD 376.15 compared to USD 1,889.02 of global figure, the survey added.

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