Case Studies

Shrinkage rate survey

by Mark Rowe

Mass merchants and department stores have seen a 58 per cent increase in shrinkage rates since last year, which is no surprise as they continue to treat online and store loss prevention separately according to the 2016 UK Retail Fraud Survey.



Published by Retail Knowledge and sponsored by WIS International, the inventory and data collection services company, for the second consecutive year, the survey covers the systems, processes and strategies of UK retailers.



Increasingly retailers are taking a joined up approach to store and online loss prevention taking a holistic approach to risk across all channels, the study suggests. Only a few years ago the survey concluded that hardly any retailers took this stance. However, this year only 30.3 per cent of retailers continue to operate in silos across channels, a shift in how risk is managed. In this respect Mass Merchants and Large format speciality are lagging behind, with 60 per cent and 40 per cent respectively still treating channels separately.

Those taking an holistic approach to loss prevention across all channels have seen a decrease in shrinkage rates whilst those who have opted for the separate approach have seen a massive increase in the last year which has contributed to the £2.34 Billion loss to shrink.



Paul Bessant of Retail Knowledge, pictured, says: “Today departments work together across the broad range of disciplines necessary to support the multiple channels through which business is conducted. This inter-departmental approach typifies the operations of leading retailers and is reflected in this survey which, inter alia, documents the change from a silo approach to online and offline, to a holistic one.

Only 36.6 per cent of retailers treat online and offline separately, compared with figures going back to 2013 when the figure was closer to 100 per cent! This is really great news, considering shrink has fallen again this year, it really shows that working collaboratively is the most effective way of beating retail crime. Those retailers that do treat online and offline separately need to rethink their approach if they are to effectively lower shrink year on year.”



The survey showed a decrease in credit card fraud; down from 55 per cent (2015) to 51 per cent (2016), return fraud has dropped from last year’s figure of 0.5 per cent to 0.33 per cent of sales and store loss prevention spend has jumped to 1.06 per cent of sales from 0.6 per cent of sales.

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