Global Theft Costs Retailers, Consumers $104B Annually

Thorofare, N.J. The level of global retail theft reached $104.5 billion in the past year, leading to increased costs for both retailers and consumers alike, according to the second annual Global Retail Theft Barometer, a survey conducted by the Centre for Retail Research.

While global retail shrink as a percentage of total sales has declined slightly in the past 12 months, the overall cost of retail crime has increased substantially, the survey found.

The $104.5 billion lost by global retail shrinkage over the past year is equivalent to 1.34% of retail sales. In North America, shrink totaled $42.338 billion, or 1.48% of sales, with the U.S. accounting for the majority of that figure.

While the global figure represents a marginal decline in shrinkage of $1.56 billion (-1.5%) compared to 2007, due in part to the increase in survey respondents and a slight decline in shrink, the overall cost of crime to retailers has increased by $4.7 billion since last year.

The cost of retail crime, calculated on the basis of crimes by customers, employees and suppliers/vendors (excluding internal error), plus the costs of loss prevention, were $112.78 billion in 2008, compared to $108.1 billion last year.

The survey noted that employee theft is the largest source of shrinkage for retailers in North America and Latin America (46.3% and 42.0% respectively), while customer theft is the leader in the Asia-Pacific region and Europe (53.8% and 46.8% respectively).

Globally, customer theft, including shoplifting and organized retail crime, remained the largest source of shrinkage loss in most individual countries, totaling more than $43 billion (41.2% of total shrinkage).

Employee theft accounted for 36.5% of shrinkage ($38.15 billion), while supplier/vendor theft and supply chain fraud represent 5.8% of shrinkage ($6.09 billion). Internal errors and administrative failures (such as pricing, process or accounting mistakes) accounted for 16.5% of losses ($17.22 billion).