Tight Security At Grocery Stores Proof Economic Recovery Fragile

           Despite claims from Western leaders that the world economy is already starting to recover, grocery theft by first-time shoplifters, record high theft by employees and food price inflation paints a different picture.

The fact is, a lot of the more recent theft is being carried out by the store's own employees (44% of all 2009 losses) who, in an ironic twist are stealing from their own customers (who are incurring the costs through higher prices).  Already at record levels ($115B year ending June 2009), in 2011 global retail theft was up +6.6%

Through the last couple years, North America has been near the top in terms of percent increase in theft however in aggregate terms, India and Russia have reported the highest rates;  The lowest rates last year were in the wealthier parts of Asia (Japan, Hong Kong).

Theft now represents 1.45% of all retail sales, and that's up +6.6% despite retailers spending $28.3B on security (up +5.6%).  Representing in excess of 3% of total revenues, fresh meat theft is posing a real challenge for grocers many of whom are operating at sub 5% margins.  Making matters worse are skyrocketing meat prices (beef prices are at a record high after a +10% increase in 2011, 4-5% increase expected in 2012: beef prices are increasing due to low cattle numbers (lowest level since 1952) and unstable corn prices (linked to corn ethanol demand).

That's not to say that the average consumer isn't being pressured to shoplift. In British Columbia, Canada there is an increasing number of first time shoplifters. 

       

       Security companies are quick to point out reasons why your average grocery shopper should be considered a bigger risk, but I say not so fast !  A lot of the increase in shrink stems from organized crime and employee theft (in 2011 24% of global retailers reported an increase in employee theft).  One of the methods being utilized by employees to steal products is shrink-wrapping the product before storing it in the garbage. In fact last year organized crime accounted for as much as $30 billion worth of shrink loss in the United States alone. The National Retail Federation reported that 96% of US retailers suffered organized crime theft in 2011, up from 94.5% the year before.

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