"The cost of retail shrink is not just borne by retailers, but by consumers and society at large", said Rob van der Merwe, president and CEO of Checkpoint Systems, Inc., which sponsored the study. "Shrink is a serious threat to retailers' bottom lines, and amounts to a hidden 'tax' on consumers who are already dealing with the strain of tightening household budgets during the economic downturn."

The Global Retail Theft Barometer (GRTB) is an annual survey conducted by the Centre for Retail Research in Nottingham, UK, and sponsored by Checkpoint Systems. This year's survey, the most complete analysis of global shrink ever conducted, reports key findings on retail shrinkage and crime in 36 countries and on five continents, based on data from a confidential survey of 920 large retailers with combined sales of 554.334 Meuro and 115.612 operating retail outlets. All figures in the report relate to the twelve-month period ending in June 2008.

Global retail shrinkage (stock loss from crime or waste expressed as a percentage of sales) cost retailers 71.165 Meuro over the past year, equivalent to 1,34 percent of retail sales. In North America, shrink totalled 28.832 Meuro, or 1,48 percent of sales, with the U.S. accounting for the majority of that figure.

While the global figure represents a marginal decline in shrinkage of 1.061 Meuro (-1,5 percent) 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 3.201 Meuro 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 76.803 Meuro in 2008, compared to 73.616 Meuro last year.

"This sum represents a tax imposed on honest people by retail criminals of 157 euro per household, or 48,50 euro for every individual person in the 36 countries surveyed", said professor Bamfield, director of the Centre for Retail Research.

Employee theft is the largest source of shrinkage for retailers in North America and Latin America (46,3 percent and 42 percent, respectively), while customer theft is the leader in the Asia-Pacific region and Europe (53,8 percent and 46,8 percent, respectively).

Globally, customer theft, including shoplifting and organized retail crime, remained the largest source of shrinkage loss in most individual countries, totalling more than 29.283 Meuro (41,2 percent of total shrinkage). Employee theft accounted for 36,5 percent of shrinkage (25.980 Meuro), while supplier/vendor theft and supply chain fraud represented 5,8 percent of shrinkage (4.147 Meuro). Internal errors and administrative failures (such as pricing, process or accounting mistakes) accounted for 16,5 percent of loss (11.726 Meuro).

The level of customer theft is increasing in North America and Asia-Pacific, where the percentage of customer shrink has increased 3,1 percent and 2,3 percent, respectively. In contrast, employee theft in Europe rose from 28,6 percent to 30,5 percent in this period.

Retailers reported that stolen merchandise accounted for 38,4 percent (or 9.942 Meuro) of internal fraud, while almost one-quarter (23,8 percent) of internal losses were in the form of stolen cash, coupons, vouchers or gift cards (more than 6.129 Meuro).

Current loss prevention systems and processes helped retailers apprehend nearly 5,3 million customer and employee thieves in 2007-2008, the majority of which were customers (84,6 percent). The average amount stolen or admitted per customer theft incident was 223 euro. Employee theft sums were more than 5,6 times greater per incident, averaging 1.254 euro. The total value recovered, including customer and employee theft, was 2.043 Meuro.

"The primary role of most Shrink Management Systems is to create a strong deterrence for theft by making the risk and reward analysis less attractive for would-be thieves", said Per Levin, president, Shrink Management Solutions, Checkpoint Systems. "People are used to a certain 'lifestyle' and will try to maintain it even if they lose their job or find themselves with a lower paying job due to the recession. The reported 2.043 Meuro recovered from over 5 million individuals sends a strong deterrence message to society at large. In the next few years, systems and processes will need constant improvements to increase the risk of detection for likely thieves."

Retailers in Europe and North America apprehended the largest numbers of thieves (2,8 million and 2,1 million, respectively), with North America reporting the largest percentage of employee thieves at 32,3 percent.

Refund frauds and false markdowns rose substantially, comprising 19,7 percent of internal fraud (5.108 Meuro) - an increase of 34 percent since last year. Collusion represented 10,3 percent of losses (2.656 Meuro). Large financial frauds, also on the rise, accounted for 7,8 percent of internal fraud (2.023 Meuro).

North America also reported the highest average dollar amount stolen by customers, at 509 euro per incident. The high average in North America is thought to reflect the impact of organized retail crime. Average amounts stolen per apprehension in other regions are much lower - 73,50 euro in Europe and 23,80 euro in Africa, for example. However, in Europe the average amount stolen per employee thief was 2.142 euro (compared to 947 euro in North America). In Asia-Pacific, the average amount stolen by employees was 269 euro.

"With the uncertainty surrounding our current climate, we believe the industry can learn quite a bit from the data revealed in this year's GRTB", noted van der Merwe. "We suspect the increase in organized retail theft uncovered in the study could be directly attributed to the downturn in our economy."

"Another interesting fact revealed in the survey is that retailers on average provided no specific protection for almost one-third (30,3 percent) of their top fifty most-stolen product lines", continued van der Merwe. "This represents an immediate opportunity for improvement. As the recession increases pressure on shrink, we are partnering with retailers to help solve their biggest challenges. Most of them see the need to improve their shrink management programs and it is critical to develop a targeted approach for the most vulnerable products to protect their bottom lines in 2009."

Thieves are remarkably consistent in their choice of goods, regardless of geographic region, favouring merchandise such as razor blades/shaving products, cosmetics/face creams/perfumes, alcohol, fresh meat/expensive foodstuffs, infant formula, CDs and DVDs, fashion, electronic games, cellular phones and watches.

Retailers estimated that on average they lost between 2 percent and 5 percent of new product lines to theft. Popular products such as the Harry Potter books, electronic games, and recent DVDs reached loss levels of up to 8 percent, causing supply shortages.

Global loss prevention costs were 17.345 Meuro or 0,33 percent of retail sales, a decline from last year's 0,35 percent.

Electronic article surveillance (EAS) was the main method of protecting high-theft items (used for 38,3 percent of product lines). Other means of protection included keepers/safer, display in locked cabinets or locked shelves, cables or loop alarms, and dummy cartons or ticket systems (4,1 percent).

North American and Latin American retailers had higher loss prevention costs as a percentage of sales (0,43 percent) compared to their counterparts in other regions, and were more likely to utilize EAS technology.

EAS was used in North America and Latin America for 43,5 percent of vulnerable lines, compared to 36 percent in Europe and 31,3 percent in Asia-Pacific/Africa. EAS source tagging was used on 13,7 percent of vulnerable lines in North America and Latin America, compared to 7,9 percent in Europe and 3,6 percent in Asia-Pacific/Africa.

"We hope retailers will use this year's Global Retail Theft Barometer as a tool to better understand current global shrink trends", concluded van der Merwe. "During a weak economic climate, shrink is more likely to increase, so it is even more important for retailers to remain vigilant. Our goal in sponsoring this report is to help the retail industry and loss prevention professionals formulate new and more advanced responses to combat shrink in an ever-changing global economy."

A total of 212 corporations in North America (combined sales of 223.368 Meuro), 502 from Europe (283.296 Meuro sales), 131 from Asia-Pacific (35.412 Meuro), 57 from Latin America (9.534 Meuro) and 18 from Africa (2.243 Meuro) responded to the questionnaire sent to 3.900 major retailers covering all major types of retail business in the 36 countries surveyed. The response rate was 23,6 percent. This year, the survey was also expanded to include data from Argentina, Brazil, Mexico, South Africa and Malaysia.

Change Rate Data Research due to September 24, 2008: USD 1= Euro 0,681