Mumbai: Indian retailers reported the highest loss of stocks to theft in the world for the fifth year in a row in 2011, with about half of the loss attributed to shoplifting by customers.
India’s shrink rate, or loss of stocks because of thefts by customer, employees and suppliers, as a percentage of sales was 2.38%, costing local retailers Rs3,470 crore, according to the fifth annual edition of the Global Retail Theft Barometer, an annual survey conducted by the Centre for Retail Research in Nottingham, UK, and underwritten through an independent grant from Checkpoint Systems.
The study was conducted across 43 countries between July 2010 and June 2011. In India, it covered 100 retailers, of which 60 were part of modern chains and 40 were from the unorganized sector.
The biggest contributor to losses was thefts by customers, accounting for 47.6% of the total, followed by pilfering by employees at 25.5%. The losses have, to be sure, declined 12.5% from a year earlier, according to the study.
“Over the years the shrinkage rate is coming down as we are getting better at managing our supply-chain logistics and moving towards hyper retail,” said Mohit Kampani, vice-president of merchandising, food and fast-moving consumer goods at Spencer’s Retail Ltd. Over the past three years, shrinkage at Spencer’s has reduced from 2% of sales to less than 1% now, said Kampani.
To reduce thefts, retailers in the nation are spending more money on security solutions. “India’s spends on loss prevention at 0.23% of sales is higher than China and Asia Pacific region but lower than the global spends, which are at 0.35% of sales,” said Dharmesh Lamba, general manager, customer management, South Asia, Checkpoint Systems India Pvt. Ltd.
Companies have also minimized their losses by providing more training to employees and assigning responsibilities on team and store managers for losses.
For instance, Univercell Telecommunications India Pvt. Ltd, a retail chain with 400 stores selling mobile phones in South India, has trained its staff to show no more than five pieces at a time to a customer. The stores are fitted with cameras and in cases of thefts the money is recovered from the staffs’ salary.
Still, the chain loses at least one mobile phone a month at every store it operates. “Theft is very common in retail and can happen due to internal pilferage or consumers. We are taking measures to reduce it,” said Satish Babu, managing director of Univercell Telecommunications.