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Topics: Case study, Retailing, Management Pages: 64 (16266 words) Published: November 17, 2013
Effective Retail Loss
Prevention
10 Ways to Keep Shrinkage Low

Adrian Beck
Department of Criminology
University of Leicester

February 2007

Effective Retail Loss Prevention:
10 Ways to Keep Shrinkage Low
To contact the author:
Adrian Beck
Reader in Criminology
University of Leicester,
Department of Criminology,
154 Upper New Walk, Leicester LE1 7QR
United Kingdom
Email: [email protected]
The comments expressed in this report are of those of the author and do not necessarily represent the views of any of the companies that agreed to take part, nor of Procter and Gamble who very kindly supported this project. All rights reserved. This report, or parts of it, may not be reproduced without the prior written permission of the author.

Contents
Introduction

5

Executive Summary

7

Research Methods

9

Findings

12

Strategic Level Factors

14

Establishing Senior Management Commitment

14

Ensuring Organisational Ownership

15

Embedding Loss Prevention

16

Cultural Level Factors

20

Providing Strong Leadership

20

Generating Barometer Management

21

Prioritising People

23

Organisational Level

23

The Loss Prevention Team

24

Prioritising Innovation and Experimentation

25

Talking Shrinkage

27

Emphasising Procedural Control

28

Operational Level Factors

32

A Difference of Opinion

36

A Noticeable Omission

38

Summary

40

KEEPING SHRINKAGE LOW

Creating Store Management Responsibility

32

3

Introduction

A

2005 ECR Europe Shrinkage Survey concluded that there were 6 steps to successful shrinkage reduction: having a written company policy; high levels of intra-company co-operation; prioritising the problem; incentivising staff; conducting regular shrinkage reduction projects; and making use of the ECR Europe Road Map1. All of these factors were correlated with lower levels of shrinkage – those companies that employed these strategies had lower levels of loss than companies that did not.

It is widely recognised that over the past 20 years or more, the retail industry has for the most part failed to adequately deal with the problem of shrinkage. Reviews of numerous surveys show that the underlying rate of loss continues to be high, with a recent estimate suggesting that globally retailers operating in the Fast Moving Consumer Goods Sector (FMCG) lose €46.8 billion ($61.5 billion) to crime alone, ignoring the losses due to process failure2, which conservatively may account for a further €10 billion a year($13.1 billion). However, recent work by ECR Europe has shown that retailers (and their suppliers) who have made use of the ‘Shrinkage Road Map’ have achieved not only impressive reductions in stock loss, but also increased sales volumes as well3.

The ECR Europe Shrinkage Road Map
Moreover, there is
growing evidence, some
of which has been
captured in various ad
Evaluate
Plan
Evaluate
Plan
hoc studies carried out by
researchers around the
globe, that certain retailers
Implement
Map & Measure
Implement
Map & Measure
continually succeed in
having lower rates of loss
Develop Solutions
Analyse
Develop Solutions
Analyse
than others – they seem
to have an ‘approach’ that
works in terms of achieving low shrinkage. The recent ECR Europe Shrinkage survey went a little way in beginning to synthesise what the characteristics of this ‘approach’ might be, albeit at the macro level, although the nature of the methodology adopted meant that other more qualitative organisational factors could have been excluded.

Corporate Policy
Corporate Policy

1

Beck, A. (2004) Shrinkage in Europe 2004: A Survey of Stock Loss in the Fast Moving Consumer Goods Sector, An ECR Europe White Paper, Brussels: ECR Europe.

2

PRCI Ltd (2004) The Illicit Market in Stolen Fast-Moving Consumer Goods, Leicester: PRCI Ltd.

3

Beck, A, Chapman, P. and Peacock, C. (2003) Shrinkage: A...
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