Fixing process failures in the supply chain instead of trying to stop shoplifting is the only way to get to grips with shrinkage, experts have warned.
Speaking at the IGD Retail Logistics conference last month, Colin Peacock, global customer director, Gillette, said shrinkage had remained stubbornly flat at about 1.8% of retail grocery sales between 1991 and 2001, while cash spent on trying to tackle it had increased from 0.32% to 0.55% of sales over the same period.
He said: "Traditionally, loss prevention has focused on customer theft and technological solutions such as tagging and CCTV, without any effective analysis of ROI [return on investment]."
Shrinkage at Tesco has gone down from 1.01% of sales in 2003 to 0.69% of sales in 2005 through focusing on a 'hot list' of problem products, building a secure supply chain through improving packaging, storage and checkout procedures and monitoring stock levels at every stage in the chain to identify trouble spots, he said.
"When you are turning over £40bn, even tiny improvements in shrinkage can translate into a dramatic improvement on the bottom line."