The most detailed report into loss prevention ever conducted of the UK retail sector has found that UK retailers experienced losses of £3.4 billion due to theft and fraud in 2012, a 10% increase on last year.
Conducted by research company Martec International, The Retail Fraud Study conducted detailed interviews with Loss and Fraud prevention professionals at 100 of the UK’s top retailers, including Tesco, Marks & Spencers, John Lewis and HMV, accounting for 42% of the UK retail market, a sample size unrivalled by any other study.
Frances Riseley, Martec’s deputy managing director who oversaw the project, commented: “It is common that in times of recession theft and fraud increases but this activity has cost UK retailers £3.4 billion in the space of a year. Worringly for retailers 22% of this was due to theft by their own staff highlighting the importance to retailers of installing a positive culture to prevent losses. These surprisingly high losses come against a back drop of a difficult trading period creating more uncertainty for UK retail.”
In challenging economic times spending on loss prevention by retailers fell from 0.8% of sales to 0.7% of sales last year seeing shrinkage increase to 1.0% of sales from 0.9% of sales the previous year. The increase means that losses are now almost matching retailer’s profits which pre-tax average 1.5% of sales painting a worrying picture for the UK retail market.
Mike Gleeson, development and operations manager business protection for John Lewis, commented: “We participated in the Retail Fraud study and found the insight the report provides valuable, demonstrating that the retail sector benefits from a collaborative approach in tackling the issues it faces.”
The Retail Fraud study also uncovered a change in consumer shopping habits with online purchases increasing to account for 9% of total sales. This demonstrates the top 100 retailers are in line with the findings of the Office for National Statistics who report that 9.6% of all sales nationally are now conducted on the online channel.
Whilst consumers’ habits changed so did those of thieves as the retail sector saw a fall in the theft of high priced goods and an increase in the theft of everyday essentials such as food – joints of meat were the most commonly stolen item – emphasising the impact of the recession on the everyday shopper.
Fran Riseley added: “In a challenging economic environment retailers are being forced to cut operating costs due to falling sales. This includes reduced spend on loss prevention which is having a negative effect on how much loss the industry is suffering. The Retail Fraud Study is a truly comprehensive piece of research which gets to the heart of the issues UK retailers face. Hopefully it will provide them with some strategic insight and assistance in tackling those problems.”
The Retail Fraud Study was sponsored by Volumatic, the UK’s leading manufacturer of intelligent cash handling equipment and RGIS the global leader in stocktaking, supply chain and merchandising solutions.
Simon Parry, Commercial Director Europe at RGIS, said: “The retail industry is facing many battles to develop growth in challenging economic times but the Retail Fraud Study will enable the sector to examine the issues it faces so that it can face them head on moving forward. We are delighted to be associated with such a comprehensive piece of research that will truly enable us to work directly with the sector to assist in reducing shrinkage with our top of the range stock-taking products.”
James Harris, Commercial Director at Volumatic, added: “The Retail Fraud Study provides a forum for the retail sector to voice the issues it faces, providing a document that can be used collaboratively to help tackle shrinkage across the sector. By engaging directly with the retailers we can identify new ways to assist the industry in tackling its losses and develop our market leading products to help retailers reduce shrinkage and drive growth in the sector.”