Incident and Security Management:
profit vs shrinkage
Grow and protect your profit margins
through better Incident and Security Management
I N T H I S W H I T E PA P E R
What is Shrinkage?
Th e s t a t s
Prevention
Adapting to your
environment
How incident and
security management
solutions can help
What is Shrinkage?
Def: ‘shrink’: Inventory loss caused by crime
or administrative error.
*speak ing at Retail Fraud on the Road
Shrinkage is the number one cause of profit
loss in the retail industry worldwide and
is notoriously difficult to mitigate due to
the large number of ways in which it can
originate.
The stats
According to the Global Retail Theft
Barometer 2011, over £76 bn. was lost last
year alone due to shrinkage - an average
of 1.45% of global retail sales. 43.2% of this
was down to shoplifting, 35% attributed to
employee theft, 5.6% to supplier/vendor
fraud and 16.2% was caused by genuine
human error at the point of sale.
But these are just the top four causes of
shrinkage. Shrinkage can also result from
damage caused to goods whilst in transit
or in the store, administrative errors such
as warehouse discrepancies or misplaced
goods, perishable goods not sold within
their shelf life or just general paperwork
errors.
And it’s on the rise... In 2011 the cost of
shrinkage rose by 6.6% and 36% of retailers
reported that actual and attempted
shoplifting rose significantly last year and
24% suffered higher employee theft.
Prevention
Preventing this type of shrinkage
is traditionally addressed by
employing security guards, installing CCTV
cameras and security tags… But Robert
Jennings, Head of Loss Prevention at Boots
plc.* feels that this doesn’t go far enough to
tackle this very costly problem.
“Whilst we can go a long way to identifying
where a large proportion of loss comes from,
there is always a significant percentage of
“unknown loss” that we simply can’t put our
finger on. We just don’t know where it went.
Boots recently spent a large proportion of
its security budget on CCTV, but justifying
this expenditure was difficult. The trouble
with CCTV is that it is reactive – it doesn’t
solve the problem for you. You only get to
prosecute the thief once the crime has been
committed and very often the cost of the
theft is not recouped. Therefore is CCTV
really an effective solution?”
White Paper
Incident and Security Management:
profit vs shrinkage
Grow and protect your profit margins
through better Incident and Security Management
I N T H I S W H I T E PA P E R
What is Shrinkage?
Th e s t a t s
Prevention
Adapting to your
environment
How incident and
security management
solutions can help
Jennings also referred to a “general herding
instinct” in the retail sector – a case of
“everyone else on the high street has got an
alarm system so we should get one too”. He
added that “…big expensive decisions are
often made on a gut feeling – when they
should be made based on actual facts” –
something that technology can help with.
- greatly improving loss prevention and profit
margins.
All this would have been impossible
without a little investigation. The key to loss
prevention is finding out exactly where it’s
going wrong. One thing that can really help
in this respect is incident management (IM)
software.
Adapting to your environment
Retailers need to adapt to the current
environment – a couple of years ago, Boots
were spending more on security solutions
than the problem itself posed, yet not seeing
any reduction in shrinkage. Through a bit of
investigative work they discovered they were
losing a lot of money through staff theft
at cashing up time. Now, having identified
the cause of the loss, they have been able
to eliminate it. Boots have implemented a
new policy whereby cashing-up no longer
happens in-store. The tills get sent straight
to the bank where a member of bank staff
counts the cash.
How incident and security management
solutions can help
IM enables the retailer to log the minutiae of
any shrinkage-related incident that occurs;
from staff fraud and theft to simple admin
errors occurring in the warehouse. Record
(amongst many other things) where it
happened, what time of day it occurred and
who was working at the time. Over time,
the collation of this invaluable management
information builds an incredibly accurate
picture of exactly where the security
failings are occurring, giving the retailer the
opportunity to plug the holes in the system
and reduce profit loss.
So as a result of implementing a more
practical solution chosen as a direct result of
finding out where things were going wrong,
Boots have not only eliminated this source of
theft but are spending less money on salaries
To find out more about Expolink Europe’s
Incident and Security Management
Solutions, call 01249 661 600, email
Rachel Southcott or click here
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