Category Archives: Retail Knowledge

Retailers loose $5.8 Bn. in shop lifting and thefts

shopliftingDespite all the closed-circuit television cameras, electronic article surveillance (EAS) and security personnel, retailers continue to wage a losing battle against shoplifters, says Jack L. Hayes International Inc., a leading loss prevention and inventory shrinkage control consulting firm.

Among 24 major retailers surveyed by the firm, which represented 13,313 stores nationwide (U.S.) with combined 2005 annual sales of more than $519 billion, a staggering $5.8 billion (or 1.6%) was lost to shoplifters and employee theft.
But according to the survey, an even more worrisome concern to retailers is the growing threat posed by dishonest employees. In fact, the survey shows that for every 26 employees, one was caught with a hand in the cookie jar in 2005.

The survey also found that the number of employees caught stealing in 2005 rose to 68,994, an increase of 11.4 percent over the previous year. By the same token, $49.9 million was recovered as a result of those apprehensions, an increase of 17.8 percent over 2004.Mark Doyle, president of Jack L. Hayes International, says the $5.8 billion figure was derived by multiplying total sales by 1.6 percent, which is the average shrinkage according to the 2005 National Retail Security Survey conducted by the University of Florida.

Doyle says the total theft loss amount may be even higher. “We took 30 % (against usual 20%) for paperwork and systems errors. If anything, we were more conservative.”

“The dollar losses are staggering,” says Doyle, adding that in the end everybody gets hurt because retail theft “drives consumer prices higher.”

Look for the cat-and-mouse posturing between retail surveillance and shoplifters to get even dicier as the holiday season approaches. “Without looking at hard data, retail thefts tend to increase during all busy shopping seasons,” said an expert.

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Socio Economic Classes (SEC categories)

IRS_Logo Almost every one associated with retailing, marketing, media and consumer economics is required to deal with SEC categories. These categories are important as they help in effectively segmenting markets and targeting communication to core consumers.

Terms like, SEC A, SEC B, and the like are freely tossed around by all, however, only a few know their real meaning. Very few, for example, may be aware that many traders, who may be affluent with more spending power than most executives will fail to make the ‘high’ grade, if they are not graduates.

Although, MRUC & Hansa Research have come up with a new concept of Household Potential Index (HPI) to reclassify consumers, SEC continues to remain universally referenced classification of consuming classes. While, a detailed postings on HPI will soon follow, we explain below the basis of classification of different urban SEC categories and their relative importance in relation to marketing/ retailing potential: Continue reading

Combating retail shrinkage with RFID

rfid2Retail shrinkage is the difference between book stock and actual stock. It is the unaccounted loss of retail goods. Its main causes are theft by employees, administrative errors, shoplifting by customers or vendor fraud.

Rakesh Biyani, Director, Pantaloon feels that as India enforces the MRP (Maximum Retail Price) system, the retailer has very little profit margin. Large retail outlets such as Big Bazaar and Pantaloon have investments in RFID, CCTV and antennas to reduce retail shrinkage reports Network Magazine. RFIDs in particular are being adopted widely by these retail majors. “If somebody steals goods without paying, it is the public who ends up paying for it. We identify compulsive shoplifters and often catch them three or more times in the same month. We try not to involve the police especially when teenagers are involved. This is where RFIDs are useful in protection of goods,” explains Biyani.

Dharmesh Lamba, Country Head, Checkpoint echoes the sentiments. He points out that India’s organised retail is only 3 percent while 97 percent is unorganised. “India is the second largest growing economy in retail, after China. Around 300 plus shopping malls are coming up in 2006 alone. New products launched globally are now launched simultaneously in India as well,” says Lamba. Continue reading