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Recession driving up retail crime.

A survey published last week confirmed a trend that many in the retail industry have been expecting – or indeed encountering – for some time as a result of the recession: crime is on the up. By Helen Dickinson

CITY & CORPORATE

Recession driving up retail crime.

A survey published last week confirmed a trend that many in the retail industry have been expecting – or indeed encountering – for some time as a result of the recession: crime is on the up. By Helen Dickinson

According to the British Retail Consortium’s Retail Crime Survey 2009, retail theft alone rose by a third in the UK in 2008/2009 to reach almost half a million incidents. This represents a rise of a third compared with last year, when the survey found a reduction in incidents.

And for the first time the BRC’s survey also looked at how many crimes go unreported – some two thirds – meaning the number of shoplifting incidents could be as high as a million each year. Retail theft on this kind of scale is unfortunately to be expected in a recession as more people have the motivation to commit such crimes.  But with the cost to retailers estimated to be over £1 billion – the equivalent of 72,000 retail jobs – it goes without saying that this is an expense the industry can ill afford.

The Global Retail Theft Barometer, published last November by Checkpoint Systems, painted a similar picture to the BRC’s research, highlighting a 20% increase in shoplifting with luxury, branded and designer goods top of the “hit list”. According to this report, clothing and accessories were particularly hard hit, with shoplifting now accounting for 1.85% of the value of total sales, followed by DIY and hardware (1.82% of sales) and speciality food and convenience stores similarly suffering a loss of 1.8% of sales.

While most retailers agree that stock loss is likely to rise during a recession, due to the cost cutting environment that many companies are operating in there is pressure to be spending less.But given the scale of these losses for many retailers – particularly those in sectors such as those above which are particularly vulnerable to theft – it is apparent that cost cutting in the area of security could well be a false economy.

Many retailers are revisiting their strategies and resources in this area to ensure what they are investing in that will give them the best return – whether that be more resource to undertake regular checks or technology around identifying unusual transactions or tagging of high risk products.In the current environment, there is a wider divergence between the strong versus the weak performers in this area – as is the case across retail more generally.  Those that get it right will see the profitability benefits not just now but in the longer term.  They will not be taking the short term view.

Helen Dickinson is Head of Retail at KPMG

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