Global Retail Theft Barometer Study finds shrinkage in Japan is the 2nd-highest in the world

Checkpoint Systems, Inc.

According to the fifth annual edition of the Global Retail Theft Barometer, retail shrinkage rate in Japan is 1.04 percent of sales, the third-lowest in the world. However, this rate was up 4 percent compared to the previous year. The total shrinkage amount – profit loss due to customer and employee theft, supplier/vendor fraud and administrative errors – in Japan reached JPY774  billion (USD9.96b), the second-highest worldwide, representing almost 53 percent of the total sum in the Asia-Pacific.

The study, conducted by the Centre for Retail Research and sponsored by an independent grant from Checkpoint Systems, monitored the costs of shrinkage in the global retail industry between July 2010 and June 2011, and found that total global shrink cost the retailers JPY9,602.7 billion in 2011 or 1.45 percent of sales. This global shrink rate is 6.6 percent (4 percent in Japan) higher than the previous year, and represents the highest percentage recorded by the survey since it began in 2007. Customer theft, including shoplifting and organised retail crime (ORC), was the main cause of shrinkage in most countries, costing retailers JPY4,152.3 billion in 2011 (43.2 percent of total shrinkage) compared to 42.4 percent in 2010. ORC became a growing problem internationally and the percentage of retailers globally suffering increased ORC losses was an average of 47.5 percent. Dishonest employees were responsible for JPY3,362.1 billion or 35 percent of shrink. In Asia-Pacific, a majority of retailers perceive dishonest customers as the single most important source of loss, responsible for JPY782.1 billion of losses or 53.3 percent. However, the average amount admitted stolen by employees was more than four times the average stolen by shoplifters.

Shrinkage in Asia-Pacific

The highest average rates (as percentage of sales) of shrinkage were found among:

  • Cosmetics/perfumes/health & beauty/pharmacy (1.75 percent)
  • Apparel/clothing and fashion/accessories (1.74 percent); and
  • Video/music/gaming (1.64 percent)

Small but expensive "mobile" items tend to have the highest risk for theft. The most-stolen items were from the cosmetics category, including:

  • Shaving products (2.64 percent)
  • Perfumes/fragrances (2.6 percent)
  • Lipsticks/glosses (2.5 percent)

High quality seafood/fish (2.21 percent), alcohol/liquor (1.84 percent) and fresh meat (1.83 percent) made up the top three most-stolen grocery "high-risk" product lines.

Shrinkage in Japan

Sources of retail shrinkage

Customer theft (58.1 percent) was the main cause of shrinkage in Japan, costing retailers JPY451.5 billion. It is higher than the Asia-Pacific average of 53.3 percent.

  • Customer theft                  JPY 451.5 billion     (58.1 percent)
  • Employee theft                  JPY 145.1 billion     (18.5 percent)
  • Supplier/vendor fraud     JPY 56.4 billion       (6.9 percent)
  • Administrative errors       JPY 129 billion       (16.5 percent)
  • Total                                   JPY 774 billion      (100 percent)

Loss prevention and security cost

Loss prevention spending by Japanese retailers was JPY112.9 billion and equivalent to 0.15 percent of retail sales, lower than the global average of 0.35 percent and Asia-Pacific average of 0.19 percent.

The costs of retail crime

The cost of retail crime including shoplifting, employee theft, supplier/vendor fraud and loss prevention cost for Japan was JPY766 billion. The loss prevention costs are included as one of the costs of crime; without the existence of retail crime much loss prevention expenditure would be unnecessary. These costs of crime are equivalent to an annual tax imposed by criminals on honest shoppers in every household. In 2011, this 'crime tax' was equivalent to JPY14,996 per household in Japan (The Global average was JPY16,117).

  • Customer theft                      JPY 451.5 billion
  • Employee theft                     JPY 145.1 billion
  • Supplier/vendor fraud          JPY 56.4 billion
  • Costs of loss prevention     JPY 112.9 billion
  • Total                                     JPY 766 billion

The Survey

Started in 2001 in Europe and expanded in 2007 globally, the Global Retail Theft Barometer (GRTB) is an annual survey conducted by the Centre for Retail Research in Nottingham, UK, underwritten through an independent grant from Checkpoint Systems. This study is the largest and most comprehensive survey of retail theft and crime in the world. It covers key trends in retail shrink and crime in 43 countries and regions across the world, including the US, China, India, Europe, Russia, Japan and Australia. South Korea is included for the first time this year. This report has been prepared from confidential details provided by 1,187 of the largest retailers (representing more than 250,000 retail outlets) with combined sales of USD986.6 billion/JPY79,498.2billion, representing a cross-section of countries and retail vertical markets.

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