By Grant Shepherd
 
A recent global report on loss prevention has highlighted that shrinkage represents up to three per cent of retail sales, but surprisingly retailers are doing very little to stop this significant loss in profits.
 
According to Mark Larson, global and US head of retail KPMG, the recent Global Retail Loss Prevention Survey 2009 has highlighted that many retailers have learned to live with losses caused by damage, theft and counting errors, and asks the question of whether many businesses have become complacent.
 
“The survey suggests they are,” he said. “Shrinkage rates of up to three per cent of sales represent a very large loss of profit, yet our survey shows that over 90 per cent of companies remain satisfied with their management of stock shrinkage.”
 
One of the interesting facts to come out of the survey is that a lot of stock loss is caused by internal errors due to poor design and implementation of processes.
 
“This survey has confirmed what KPMG member firms have already found through working with companies on the issue: internal error is a much bigger contributor to stock loss than many companies suppose,” he said.
 
“While retailers concentrate their efforts on reducing loss through theft, as much as half of their losses may actually be attributable to errors in the ways they manage their physical inventory.”
 
Larson also commented that many retailers are making losses that are needless and are easily fixed.
 
“Companies that want to cut those losses will need to look hard at their internal processes as well as at their vulnerability to external losses,” he said.
 
“But for companies that make the effort, there are clear gains to be made. Cutting shrinkage goes straight to the bottom line and, in today’s tough retail conditions, the prospect of real loss reduction is just too important to ignore.”