It may be time to call India a country of shoplifters. The Global Retail Theft Barometer 2009 Survey, which is a survey of the retail businesses in 41 countries, says India has earned the dubious distinction of coming out on top when it comes to “shrinkage”.
Shrinkage is industry language for losses caused by shoplifting by both customers and staff, and theft in transit.
At 3.2%, India has a shrinkage rate that is the highest in nine countries surveyed in Asia-Pacific, and cost companies roughly Rs12,080 crore ($2.6 billion), or Rs33 crore a day.
Nearly half of this loss, or 45.2%, was due to shoplifting by customers while employee theft accounted for 23.3%.
The rest of the loss has been attributed to internal error or process failures by the survey.
Jay Gupta, managing director of the discount-format chain The Loot, says the standard practice of shoplifters is to carry scissors to the shop and cut off the electronic tag on stuff they like, and walk away with the, ahem, loot. The electronic alarm doesn’tbeep and it’s over in a jiffy. Guptasays, on average, there is a loss of two-three pieces every week at The Loot’s 140 outlets.
“Some outlets may not lose anything but some other will lose 10 pieces. It averages out to 2-3 pieces a week,” Gupta said. Industry experts said of the total shrinkage, three-fourth is due to internal theft —- staff stealing.
In India, 33% of retailers experienced a rise in shoplifting during the slowdown of the recent past, the study, prepared by Centre for Retail Research, Nottingham, England, and funded by Checkpoint Systems Inc, said. It looked at 4,200 large retail corporations.
India is followed by Morocco (1.79% of sales lost in shrinkage), Mexico (1.75%) and South Africa (1.72%). And the lowest shrinkage? Taiwan at 0.89%, followed by Hong Kong (0.92%) and Australia (0.99%).
Shoppers Stop, one of the biggest retailers in the country, said it has managed to keep shrinkage below 0.5%. Govind Shrikhande, CEO, said the company has a supply chain software platform which connects the back-end, front-end and the supply part, and continuously monitors stock movements.
“We check for differences and if there is any major difference found, we take the action required.” Shrikhande said that most retailers are not even counting their shrinkage, and even if they did measure, not many are reporting them. “There is a lack of focus towards shrinkage in Indian retail,” he said.
Industry experts said said large-format retailers in India are struggling with 1-2% or below shrinkage figures. Gupta said many brands do not even have stock statements of their warehouses.
“At times, when the stock comes, there is shortage in the carton even as there is a seal. We have caught transporters who have the exact same seal. In trial rooms, there is shrinkage —- people hang their old jeans and walk away wearing new ones,” Gupta said.
The Loot’s shrinkage, Gupta said, was below 1% but the company is trying to bring that down further.
“The security systems are not so strong in India. Even 1% shrinkage is a huge loss for the retailer. Then there are various factors why people shoplift so much in India— the lack of education, difference in cultures, not being in a position to afford the goods..,” he said.
Pradeep Hirani, chairman of high-end fashion chain Kimaya, said he has set up monitoring rooms with dedicated staff that will have screens showing the live movement of each store we have across the country. “This is not only to control shrinkage but also to keep a check on the quality,” Hirani said. To thwart the scissorhands, Hirani said he puts more than one sensor in many apparel, “especially the expensive ones”.
And what gets stolen the most?
The survey said these are small, expensive and mobile in nature, such as electronics, cosmetics, alcohol, food, clothing and jewellery. Gupta said when shrinkage seems to be rising, he sends special audit teams. “If the situation turns serious, we inform the poilce,” he said.
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