‘Retail Shrink’ Could Lose Retailers $115B in 2009 - Retailer Daily

Now mounting to over $100 billion* worldwide, retail shrink from theft, crime, and waste is having a damaging impact on retailers’ profit margins, with over half the losses attributable to point of sale (POS) shrink—loss incurred through cashier error, theft, and fraudulent transactions.

A new report from Datamonitor, “Using Business Intelligence and CCTV to Reduce Shrink in Retail (Strategic Focus),” predicts that global retail shrinkage will climb to almost $115 billion by the end of 2009.
With global retail sales growth expected to be small or even negative, technology such as data mining used in conjunction with CCTV is one of the key solutions being tipped to combat shrink and improve the bottom line; moreover, they have a use beyond loss prevention—marketing and merchandising—according to the report.

“Retailers need to be efficient in dealing with shrink. Loss prevention will be a high priority in the coming years because of the hard business climate, so there will be growing pressure on retailers to invest,” said Christine Bardwell, retail technology analyst at Datamonitor and the report’s author.
“Using technology to uncover internal fraud quickly will enable them to discipline or retrain the staff responsible without further damage to the bottom line.”

Below, a summary of the report, as provided by Datamonitor.

Process Error, ‘Sweethearting’ Biggest Causes of Loss
The three biggest causes of loss at POS are cash theft, fraud, and process error.
“Sweethearting,” a form of theft involving collusion between an employee and customer, (usually a friend or family member), falls under all three categories, because it can involve cash theft and fraud and is very difficult to distinguish from process error.

Retailers agree that process error and sweethearting, combined, form the biggest part of loss incurred at the POS.

‘Retail Shrink’ Could Lose Retailers $115B in 2009 - Retailer Daily