India once again tops the Retail Shrinkage Survey

Company Brief

New Delhi, November 19, 2008

The second annual Global Retail Theft Barometer 2008 Survey, covering 920 large retailers across 36 countries has rated India with the highest shrinkage rate at 3.10% this year, an increase of 6.9% over last year. This revelation has put India in the topmost positions amongst Countries worldwide closely followed by Thailand, South Africa and Malaysia. This study is prepared by the Centre for Retail Research, Nottingham, England and is funded by Checkpoint Systems Inc. Checkpoint Systems Inc. has been at the forefront of developing shrink-management solutions that is benefiting retailers globally.

“In India, Most Retailers do not consider Shrinkage as a major concern. Unfortunately it is an accepted fact. They do not realize that it is killing there bottom-line directly. For e.g. A jacket stolen in a store costing Rs. 2000/- as M.R.P. & the net margin of retailer being 10% i.e. Rs. 200/-; It will take Retailer to sell 10 Jackets to recover the cost of the stolen merchandise, i.e. Jacket.” Said Dharmesh J Lamba, Country Manager of Checkpoint Systems India Private Limited.

According to the report, the countries with the highest shrinkage (as a percentage of sales) this year was: India (shrinkage 3.10% of retail sales), Mexico (1.68%), Thailand (1.59%), South Africa (1.59%) and Malaysia (1.53%). The lowest rates of shrinkage were found in Japan, Austria and Switzerland (all 1.01%), Germany (1.10%) and Denmark (1.20%).

The total shrinkage in India in 2008 is a US $ 2.543 billions which is equivalent to 3.10% of retail sales – an increase of 6.9% as compared to 2007, when the figure was 2.90%. Of the external shrinkage in India, customer theft contributed around 44.7% of shrinkage losses, employee theft was responsible for 23.7% as compared to 8.4% by Suppliers / Vendors. The remaining 23.2% was contributed by Administrative errors. Further among the Internal retail theft; merchandise theft was thought to be responsible for 27.8% of internal fraud, whereas cash, coupons, vouchers or gift cards contribute 32.0% of internal fraud, refund fraud and false markdowns contribute 14.6% of internal fraud with a collusion of 19.1%. Besides this large financial frauds were responsible for 6.5% of the internal retail theft of 2008.

The total costs of retail crime & waste loss in Asia-Pacific was $15,405 million with the largest source of loss being dishonest customers contributing $7,897 million. This is closely followed by employee thefts amounting to $3,503 million followed by Supplier & Vendor crime contributing $1,160 million. Lastly, the survey reported that internal or administrative error including accounting mistakes, pricing errors & process failures contributed to $2,845 million.

In the Asia-Pacific regions including Australia, India, Japan, Malaysia, Singapore & Thailand; highest average rates of shrinkage were seen in apparel/clothing and fashion/accessories (1.71%) followed by vehicle/autoparts/DIY hardware/building material retail (1.70%) and cosmetics/perfumes/beauty supply/pharmacy (1.66%). The lowest rates were in footwear/shoes/sports & sporting goods (0.66%), jewellery/watches (0.83%) and the least in discount/variety retail/warehouse clubs (0.87%).

As a company dedicated to facilitating interaction between different participants in an inter-continental supply chain, Checkpoint Systems Inc. has been at the forefront of developing shrink-management solutions that deliver benefits globally. Sponsoring a global survey like this year after year is an indication of Checkpoint’s commitment to furthering the flow of information between the cardinal points of retail worldwide.

For further information, please contact:

Planman – ICPAR

Diana

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