STOCK SHRINKAGE

One problem that all retailers around the world face is Stock Shrinkage - loss of goods from employee theft, shop lifting and vendor fraud. In India, the problem is particularly acute with shrinkage accounting for 3.1% of total sales . This amounts to a colossal amount of $2.5 Billion ( Rs 122.5 Billion) per year ( source : The Global Theft Barometer 2008)
A huge 45 to 50 % of this stock shrinkage is on account of Employee theft, 30 to 35% is due to shoplifting by consumers and the balance being attributed to vendor fraud/administrative lapses etc.

Globally , the average figure for shrinkage is 1.34% of sales. India however has an abnormally high 3.1% of sales. Compare this to 1.48% of The United States and 1.3% of UK.

Some common measures taken by retailers are CC TV monitoring, frisking of employees etc. These however do not seem to be enough and major retailers in India have now come together to combat the menace of Shrinkage particularly employee theft. These include Reliance Retail, Future Group, Spencers and Aditya Birla retail who will share notes on employees found guilty of theft. The current practice is to dismiss employees caught stealing who however do not face problems getting employed by any other retailer as there is almost no system of cross reference from previous employers. The plan is to circulate a blacklist of defaulting employees to prevent them to be employed by others.
Hopefully this will bring down shrinkage to some extent.