Shrink Costs the World's Retailers U.S. $98.6 Billion

Shrink Costs the World's Retailers U.S. $98.6 Billion

November 14, 2007

Large Figure Equivalent to an Annual 'Tax' on Honest
Consumers of U.S. $283.61 and U.S. $195.05 per Household in
the World and Asia-Pacific Respectively


    HONG KONG, Nov. 14 /Xinhua-PRNewswire/ -- The first
edition of the Global Retail Theft Barometer, conducted by
the Center for Retail Research in Nottingham, United
Kingdom, and sponsored by Checkpoint Systems, Inc., offers
the first attempt to put a price tag on retail theft across
the globe. The study reveals new facts about actual levels
of retail shrinkage and crime in 32 countries around the
world, including 25 countries in Western and Central
Europe, as well as the U.S., Canada, Australia, India,
Japan, Singapore and Thailand.  

    (Logo: http://www.xprn.com/xprn/sa/200701241626.jpg )

    Eight hundred and twenty retail companies, operating
138,603 stores with sales of U.S. $948 billion, provided
the data used in this study. The retailers taking part
represented 16% of total European retail sales, 13% of
North American retail sales and 5% retail sales in
Asia-Pacific.
 
    The results from the 32 countries surveyed show that
global retail shrinkage (stock loss from crime or waste
expressed as a percentage of retail sales) cost retailers
U.S. $98.6 billion, representing an annual `tax' on honest
consumers of U.S. $283.61 and U.S. $195.05 per household in
the world and Asia-Pacific respectively.

    At the same time, the global costs of retail crime (the
cost of theft by customers, disloyal employees, and
suppliers and vendors, plus the cost of loss prevention)
were US $108.1 billion. 

    The largest source of shrinkage was customer theft
(shoplifting), responsible for 42.0% of losses, or U.S.
$41.5 billion. Employee theft accounted for 35.2% (U.S.
$34.6 billion), while 16.5% (U.S. $16.2 billion) of the
global cost was caused by internal errors and
administrative failures (e.g., pricing or accounting
mistakes). Supplier or vendor theft and fraud are
responsible for the remaining 6.3% (U.S. $6.2 billion). In
the U.S., Canada and Australia, retailers reported that
employee theft was higher than theft committed by
customers.

    Retailers have apprehended almost 6 million store
thieves during this year, and 87.5% of these thieves were
customers. North American retailers apprehended the largest
number of employee thieves, while the majority of customer
thieves (3,481,490) were caught in Europe.  In
Asia-Pacific, there were 119,649 retail thieves apprehended
and 90.9% of them were customers.

    "The results show that in all countries there are
retailers who have managed to reduce shrink, while shrink
has risen for others, regardless of regional
location," explains Joshua Bamfield, Director of the
Centre for Retail Research. "This suggests that lower
rates are the outcome of strategy, policy and investment,
not of factors related to the national environment."

    "The phenomenon of shrink must be taken seriously
in the context of a global economy," notes George Off,
CEO, Checkpoint Systems, Inc. "Shrink cost has an
immediate impact on the margins of the global retail
industry -- an industry on which the world's economy,
particularly in many developing or recently developed
regions, depends for growth and stability. Retailers
worldwide are coming to the same conclusion: investing in
shrink management solutions is seen as a priority and can
provide a significant return on investment."



    The Most Frequently Stolen Merchandise From Global
Retailers

    Top 5            N. America           Europe         
Asia-Pacific
    Merchandise      Average              Average         
Average

    1.               Cosmetics            Alcohol	    
Alcohol
                     & Skincare	  
        
    2.	          Ladies' Apparel      Cosmetics       
Cosmetics
                                           & Skincare  
    & skincare

    3.	          Perfumes &            Ladies'        
Ladies'
                     Fine Fragrances       Apparel         
 Apparel        
                      
    4.               Alcohol	          Perfumes &      
 Perfumes & 
                                          Fine Fragrances  
Fine Fragrances

    5.	          Designer Apparel     Razor Blades     
High Cost &
                                                           
Specialty Food 
                                                          
(e.g. meat, 
                                                          
cheese, seafood)
    

    Internal Theft

    North American retailers apprehended a larger total and
proportion of employee thieves than retailers elsewhere. The
number of retail thieves in North America was 2.3 million
(28.6% were fraudulent employees). Asia-Pacific retailers
apprehended 110,000 thieves (9.1% of which were dishonest
employees) and European retailers apprehended 3.55 million
thieves (only 1.9% of which were dishonest employees). 

    The average cost of admitted or proven theft for
shoplifters in North America was U.S. $622. In Europe and
Asia-Pacific, it was U.S. $112 and U.S. $54 respectively.
However, the average employee theft incident in Europe cost
U.S. $5,145 (reflecting large financial frauds), compared
with U.S. $206 for employee thieves apprehended by
Asia-Pacific retailers. During the survey period, theft and
fraud by employees (internal fraud) cost U.S. retailers U.S.
$18.33 billion and Canadian retailers U.S. $1.6 billion. 

    Responses from Asia-Pacific retailers indicated that
33.1% of internal theft was believed to take place at the
checkout or cash desk, 33.6% on the sales floor, and 33.4%
in the back office, delivery bay or stockroom. 

    Security Costs

    Global loss prevention costs were U.S. $25.6 billion,
or 0.35% of retail sales. Loss prevention spending in North
America was U.S. $12.77 billion, equivalent to 29.3% of
total shrink. U.S. operating expenses dedicated to loss
prevention (LP) were U.S. $8.2 billion, while capital
expenses were U.S. $3.67 billion; in Canada the figures
were U.S. $0.7 billion and U.S. $0.27 billion,
respectively. U.S. retailer spending on loss prevention
represented 0.45% of retail sales and 0.40% in Canada.
These figures exceed LP spending in most other countries --
for example, European loss prevention spending was 0.34% of
retail sales. 

    Asia-Pacific retailers spent U.S. $1.3 billion on
revenue costs (payroll and services) and a significant
percentage of their security budget went to capital costs
(security equipment, IT and other long-term assets) of U.S.
$877 million. As a percentage of sales, revenue spending was
0.11% of sales, with capital spending representing 0.07%.

    Merchandise Protection

    By the end of the decade, 69.3% of large retailers in
Europe, 68.7% in North America and 47.3% in Asia-Pacific
are expected to source tag merchandise. This is a dramatic
increase from the percentage of retailers in the survey who
currently use source tagging technology:  45.2% in North
America, 39.7% in Europe and 27.4% in Asia-Pacific
(including 40% in Australia).  

    The average number of product lines that were source
tagged was 396 in North America (accounting for 21.3% of
retail sales), 219 in Europe (15.9% of retail sales) and 97
in Asia-Pacific (6.1% of retail sales). 

    The Centre For Retail Research

    The first edition of the Global Retail Theft Barometer
has been produced by Professor Joshua Bamfield, the
Director the Centre for Retail Research (
http://www.retailresearch.org ) with the cooperation of
Checkpoint Systems, Inc. The CRR is an independent
organization providing research and consultancy for the
retail sector dealing with the changing face of retailing
and focusing upon retail fraud and crime.  It has carried
out extensive studies dealing with the costs of crime and
the application of electronic and computerized systems to
combat shop theft and fraud in many parts of the world.

    Checkpoint Systems, Inc.

    Checkpoint Systems, Inc. is the leading supplier of
retail shrink management solutions. Checkpoint's global
team helps retailers -- and their suppliers -- reduce
theft, increase inventory visibility and provide consumers
with greater merchandise availability through the company's
rapidly evolving RF technology, expanding shrink management
offerings and Check-Net labeling solutions. Checkpoint has
more than one million RF devices installed in stores today
and has secured more than 100 billion products. Scaling
cost efficiently, Checkpoint's solutions provide increased
revenues and profits to a fast-growing community of
successful retailers, and a superior experience for their
consumers. Listed on the NYSE (NYSE: CKP), Checkpoint
operates in every geographic market and employs 3,200
people worldwide. For more information, visit
http://www.checkpointasiapac.com .

    Notes for Editors:
    
    For additional information, a PDF of the report, theft
images for TV, pictures and interviews, please contact
Checkpoint's press relations department.




    For more information, please contact:

     Checkpoint Systems, Inc.
     Asia Pacific
     Natalie Chan
     Tel:   [phone]
     Email: [e-mail]
     Web:   http://www.checkpointasiapac.com