Canadian retailers lose C$10.8 million per day to shrink

TORONTO — Shrink costs Canadian retailers almost C$4 billion per year, according to a new report.

The report, released Wednesday by PwC and the Retail Council of Canada and based on a survey of 34 retailers from across Canada, estimated that retailers in Canada lose about C$10.8 million per shopping day to theft by customers and employees, counting mistakes and organized crime. Cosmetics and fragrances, alcohol and women's clothing were the three most popular items to steal, according to the report.

“To put retail shrink in perspective, total dollars lost to shrink is almost the same amount as the total investment made each year by the entire Canadian retail industry in their information technology departments and more than what retailers invested in their finance departments,” PwC Canadian retail consulting services practice director Paul Beaumont said. “Unlike [information technology] and finance spending, however, shrink provides no benefits to retailers and requires significant time and expense to identify, manage and prevent.”

While shoplifting and organized retail crime decreased from 2008's 65% to 43% this year, theft by employees grew from 19% to 33% during the same period. “Due to the nature of its business, the retail industry tends to be at greater risk of internal crimes, such as employee theft,” Retail Council of Canada VP operations Stephen O'Keefe said. “The focus for employers is to create a heightened sense of awareness and need for staff to be a part of the solution, which has resulted in more reporting of incidents than ever before.”

Shrink as a percentage of sales has remained contained since PwC's last survey, in 2008, and many respondents to the survey noted an increase in the use of closed-circuit recording systems, observation mirrors and phone tip lines, and more than 65% of respondents indicated that they use these tools today, compared with 39% in 2008. At the same time, 35% said they frequently used alarms on merchandise, compared with 72% in 2008. “Retailers are using more sophisticated and concealed tools to keep shrink low, while at the same time trying to provide customers with a better experience interacting with their merchandise,” O'Keefe said.