Magazines Archives - 2010 Sep

Retailers in Singapore continue to fight crime and shrinkage
Story 3 - Focus

Singapore retailers are well aware of the realities of retail loss and preventing such losses remains a priority for retailers here, as evident from the many security paraphernalia that can be found in retail stores in some of the newest malls along Orchard Road, the country’s prime shopping district.

At some stores, retailers have uniformed security personnel stationed at the entrances and exits, to keep an eye on the goings-on in their retail stores, while others have deployed surveillance cameras to observe shoppers and staff in their stores throughout the day.

In the island nation, retailers are not alone in their efforts to prevent loss. Mall developers here have also engaged loss-prevention specialists to deploy their solutions, such as electronic article surveillance (EAS) systems, security tags and surveillance equipment, throughout their entire malls, in a bid to enhance the security for their tenants and ultimately providing for a better shopping experience for consumers.

Additionally, according to the latest edition of the Global Retail Theft Barometer (GRTB) survey, released by UK-based Centre for Retail Research, sponsored by Checkpoint Systems, retailers in the city-state invested about 0.23% of their revenues on security, or about S$46 million (US$34 million). This makes Singapore the secondhighest spend in the Asia-Pacific region, which averaged at 0.17%.
As a further testament to the continued efforts to stem retail loss here, shrinkage remains below the global average of 1.43%, at only 1.19%, which represents a 1.7% drop from the previous report, the study notes.

As a further testament to the continued efforts to stem retail loss here, shrinkage remains below the global average of 1.43%, at only 1.19%, which represents a 1.7% drop from the previous report, the study notes.

Malaysian retailers need to combat shrinkage and inventory loss

Shrinkage and inventory loss amount to millions annually in Malaysia, and the causes include shoplifting, employee theft and vendor fraud. According to Xtend 1Security Retail, a local security solutions provider, the estimate of inventory shortage in the Malaysian retail industry puts the country as the ninth highest in worldwide shrinkage at 1.59% of sales, well above the world average of 1.43%.

It is also interesting to note that Malaysia, Thailand and South Africa follow closely behind India, which has been rated first on the retail theft parameter in Asia-Pacific countries, according to the third annual Global Retail Theft Barometer 2009 survey. The survey was conducted among 1,069 large retail corporations across 41 countries by the Centre for Retail Research, a UK-based manufacturer and supplier of retail shrink management solutions.

According to the survey, the highest average rates of shrinkage in this part of the world included apparel and accessories, skincare, cosmetics and small electric items.

So what are companies doing to minimise losses or shrinkage in their organisations? Most are training frontline staff to be more alert and some are paying more attention to store layout to minimise the opportunity.

“Then there are some that engage security services [for] a shoplifting prevention strategy and even [install CCTVs] to cut down losses through shrinkage,” says a retail spokesperson who requests for anonymity.

Thailand’s retailers deal with rising shrinkage levels

The economic slowdown, low levels of confidence among business sectors and continued political instability remain a barrier to the growth of the retail sector in Thailand. For the past four years, the kingdom, known as one of the fastest-rising economies in the region with attractive sectors such as tourism and manufacturing, suffered badly due to these three factors.

Businesses in the country, which rely heavily on foreign tourists, had to lower their growth projections as the latest political upheaval took place in the heart of the capital, Bangkok, in May this year. After weeks of street protests that paralysed the business district, soldiers were brought in to end the chaos, which resulted in dozens of deaths.

So it was not surprising when the country’s ranking dropped further in the latest Global Retail Theft Barometer (GRTB) survey, which agreed that rising shrinkage was due to factors such as the economic slowdown and increasing unemployment, problems that have been going on for several years.

A survey conducted by Thailand’s National Statistical Office showed that the number of unemployed people in the country stood at around 450,000 in April this year. While there are no actual figures relating to retail shrinkage, the Global Retail Theft Barometer 2009 is a good indicator.

The ranking by Checkpoint Systems, a supplier of retail loss-management systems, showed that Thailand’s rate of shrinkage rose by 4.4% to US$1.06 billion last year. It is the second largest shrinkage in the Asia-Pacific region, which had nine countries surveyed, and represents 1.66% of retail sales. Global retail theft is estimated at US$114.8 billion, increasing by 5.9% from last year’s US$104.5 billion.

Philippine retailers nurture staff relationships to minimise shrinkage

In the retail sector where profit margins are being squeezed constantly and painfully, losing sales to pilferage is unacceptable. However, pilferage, whether due to unscrupulous employees or ingenious shoplifters, cannot be totally eradicated. The temptation to get valuable goods without actually paying for them is just too great.

However, it can be minimised, at least, mainly by improving standard operating procedures and becoming more careful with hiring staff, according to some of the country’s aggressive retailers that are committed to quickly expand their operations. To do that, retailers know they have to keep a tight lid on lost potential sales due to pilferage, or else what they earn may all just be lost to shoplifters and erring employees.

Shoe retailer Res/Toe/Run, which has 34 free-standing stores and close to 122 concessionaires across the country, nurtures an excellent relationship with its staff, saying it is why pilferage has not been a significant problem.

“Pilferage has not been a problem for us. This may be so because of our consistent monitoring and open communication with our store personnel. We make an extra effort to instill in our people the company’s core values,” says Res/Toe/Run operations manager Pamela Kho. “During our monthly meeting, we usually start the day with a prayer and highlight one core value. We discuss further, give examples and elaborate,” she adds.

Emphasising these values helps give the employees a higher sense of service and solidarity with the company’s objectives, thus ensuring them that they have a stake in the company’s success.

India’s retailers grapple with rising shrink levels

Indian retail industry leaders now estimate that the total losses due to shrinkage account for nearly 3%- 4% of any Indian chain’s turnover, nearly double the damage seen by their western counterparts. This translates to an annual loss of about Rs9,000 crore (US$1.92 billion) for the industry.

This has resulted in Indian retail companies becoming enthusiasts for investing in shrinkage control mechanisms such as installing RFIDs (radiofrequency identifications), sensors, IT solutions as well as employee training.

Organised retailing may be maturing at the speed of light, but big retailers are increasingly having to grapple with a diverse fraud cocktail. Within the confines of a retail mall, plain old shoplifting comes up in umpteen variations.

Retail chains are now being stung by super innovations in the fraud genre. Largely stemming from western shores, new tricks are now threatening to bruise Indian retailers’ bottom line.

Popular tricks include:

• Return fraud: A consumer comes to exchange a product, which actually has not been purchased from the store in the first place.

• Slip and fall: A consumer deliberately falls down in the shop and sues the retailer for negligence. In the Indian version, a consumer claims some valuable thing is missing from the bag he had kept with security and sues the retailer.

• Sweet heartening: An employee colludes with a friend or another colleague who poses as a customer. The ‘sweet heart’ friend then purchases some high-value item but is billed for a much-cheaper product.

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