No, I hardly qualify for anything, leave alone as a “Shrink”.
Guess many of you have read the article today, on Retail Shrinkage? For the uninitiated, this term has nothing to do with the economy or trend! In simple words, it is the Thefts / Pilferage phenomenon that plagues organised retailers, the world over.
Read more at: http://thedailyretail.com/Retail_news/Indian_rn/article/index.php?article_name=18nov01&mailer=1
However, my take from the article is a bit different. I will also take refuge under some number-crunching in the process. Given my limited education & complete absence of professionally acceptable suffixes, there are chances that the arithmetic will be full of errors. So, start reading with E&OE as embedded, please.
India has the highest “Shrinkage Rate” - 3.10%, among 36 countries covered in the study, followed closely by Mexico, Thailand, South Africa & Malaysia.
The lowest rates of shrinkage were found in Japan, Austria and Switzerland (all 1.01%), Germany (1.10%) and Denmark (1.20%).
The total shrinkage in India in 2008 is a US $ 2.543 billions (1000 Crore+) which is equivalent to 3.10% of retail sales – an increase of 6.9% as compared to 2007, when the figure was 2.90%.
Customer theft contributed around 44.7% of shrinkage losses, employee theft was responsible for 23.7% as compared to 8.4% by Suppliers / Vendors. Rest are mostly accounting / admin errors.
Further among the Internal retail theft; merchandise theft was thought to be responsible for 27.8% of internal fraud, whereas cash, coupons, vouchers or gift cards contribute 32.0% of internal fraud, refund fraud and false markdowns contribute 14.6% of internal fraud with a collusion of 19.1%. Besides this large financial frauds were responsible for 6.5% of the internal retail theft of 2008.
In the Asia-Pacific regions including Australia, India, Japan, Malaysia, Singapore & Thailand; highest average rates of shrinkage were seen in apparel/clothing and fashion/accessories(1.71%) followed by vehicle/autoparts/DIY hardware/building material retail (1.70%) and cosmetics/perfumes/beauty supply/pharmacy (1.66%). The lowest rates were in footwear/shoes/sports & sporting goods (0.66%), jewellery/watches (0.83%)
This data is indeed very interesting & might be a pointer to the following possibilities:
1. Shrinkage is considerably lesser in “developed” countries,
2. The thieves (customers + employees + vendor resources) are likely to be from middle / lower middle households,
3. Many of these may constitute of casual visitors who turned to lifters rather than shoppers,
4. The most popular stolen items are NOT essential commodities or food! and
5. Therefore has a large enough “buyer” base.
Once I add the possibilities with Fin Min PC’s request to “Reduce MRPs” & our yesterday’s debate (Gates Syndrome), that sinking feeling gets very strong!
Hope we ARE thinking, differently, for our own sake!
- Arnab
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