Retailers overestimating amount they lose to theft

Retailers are losing 3 per cent of their sales each year through "shrinkage" - theft, damage or errors - but not as much of it is because of theft as they think.

A new survey of 47 large retailers worldwide shows they estimate that in the global economic recession shrinkage is taking 3 per cent or more out of their sales.

Report author KPMG says the situation is controllable.

"What we've found is that many of these losses are totally preventable, but retailers seem to think this kind of shrinkage is inevitable," says Alan Brame, head of risk advisory services for KPMG New Zealand.

Some of the losses were because of theft by customers and staff, the firm said, and the economic downturn meant that was likely to worsen.

But the survey found that a lot of stock was "lost" because of mistakes in counting, data entry or similar errors.

As much as a third, or even more, of retailers' stock losses may be caused by mistakes inside a company, it found.

Such a high level of mistakes meant that simple improvements to how internal processes were designed and rolled out could result in significant savings.

Brame believed awareness among New Zealand retailers about the issue of shrinkage was likely to be relatively low, and the recession meant that already stretched staff may be more prone to making mistakes.