Canadian retailers see significant revenue losses due to shrinkage
While the Canadian economy seems to be improving, thanks in large part to higher retail sales throughout the country, it appears as though merchants are losing significant amounts of revenue per day and annually due to shrinkage. This is the result of customers or employees stealing merchandise and going undetected, as well as inventory errors and damaged products. Canadian retailers are doing what they can to stop the losses through alarms, cameras and other security measures.
Theft, errors resulting in large retail losses
According to recent research by PricewaterhouseCoopers and the Retail Council of Canada, retailers throughout the nation are losing approximately $10.8 million each day due to shrinkage. This equates to about $4 billion each year, as the average shrink rate for respondents was calculated at 1.04 percent of net sales. Since 2008, the results of the Canadian Retail Security Survey have held steady near this rate.
However, merchants are doing their best to cut down on theft that contributes to the shrinkage. The study found that 65 percent of companies currently use video recording systems, tip phone lines and observation mirrors to attempt to catch would-be thieves making off with merchandise. On the other hand, only a small amount (35 percent) of retailers utilize alarm systems to detect theft.
Additionally, Radio Frequency Identification (RFID) technology has been made available to Canadian businesses to reduce the shrinkage brought on by accounting and inventory errors. However, the survey revealed that none of the respondents are taking advantage of it. The high cost of implementation is the number one reason as to why RFID solutions have not been widely adopted.
As for the most common forms of merchandise that are stolen from Canadian retailers, the study discovered that alcohol, cosmetics and fragrances and ladies apparel are the items that are taken the most.
Retail sales up throughout Canada
Despite the relatively high shrinkage rate, Canadian retail sales increased for the month of August, climbing 0.3 percent from the previous month to account for $39.1 billion in total purchases. Five out of the 11 subsectors reported gains for August, including booksellers, sporting goods and hobby stores. Of the 10 Canadian provinces, six saw increases in retail sales, with Ontario leading the way, followed by Nova Scotia and Saskatchewan.
