Cutbacks in loss prevention budgets are a false economy,

says retail crime expert

British retailers will face a ‘tidal wave’ of rising crime as the recession hits consumers and businesses, according to one of the UK’s leading corporate risk specialists.

Ian Kirke, Managing Director of TFS (TFS) says incidents of ‘internal crime,’ shoplifting and assaults of staff will escalate as consumers come under greater financial pressures. With many retailers having already gone out of business and others drastically looking to cut costs and overheads, he warns that cutbacks in security and loss prevention budgets will only fuel the potential of greater losses.

“Preventing crime is a significant contribution to every company’s bottom line. Avoiding ‘shrinkage’ – attributable to employee dishonesty – as well as stock loss through shoplifting theft will have a measureable impact. With consumer stress levels leading to more assaults on front line staff, businesses may also find themselves with the additional costs of extended sick leave and having to hire temporary staff. In other words, cutting back on security is very definitely a false economy.”

Disloyal employees, according to research published in 2007, account for over 35% of ‘shrinkage’ across Europe, North America and Asia Pacific. Combined with the associated cost of lost trade, preventative measures and investigation, the cost to businesses is some £50 billion a year, equivalent to the GDP of Kuwait.

Ian Kirke adds: “Many businesses in the retail sector look upon theft as an occupational hazard and we suspect that a reasonable percentage of dishonest stock loss goes unreported. There have been important advancements in security systems and technologies but even when suspects are caught issues such as poor management training in this area and concerns over human rights legislation regularly result in businesses taking the ‘safe option’ of issuing a warning and taking no further action.”

Whilst statistics prove that it is theft by the very people that retailers are employing that can be the single biggest contributor to losses, staff can also find themselves bearing the brunt of customers’ frustrations. TFS, which works with major UK retailers, service providers in high risk sectors and local authorities, has recently supported one leading UK supermarket chain reduce attacks on its staff and incidents of public disorder by 80%, and another FTSE 100 company celebrate savings of £2.2 million annually.

“Minimising corporate threats is about £’s in the bank that enable companies to protect their profitability, safeguard their law abiding customers and staff and continue to perform to the expectations of their shareholders. Many of the trends we are seeing indicate that, more than ever, companies need to be focus on the true cost and cause of crime and its financial impact, not only to their bottom line but also their reputation.

“A survey before Christmas said that millions of Britons admitted they would consider shoplifting presents while general figures show a 30% surge in the number of thefts from UK shops in 2008. This – combined with the 19% increase in violent crime we saw during the 1992 recession – should send a clear warning signal to all HR managers and financial directors.

“Solutions exist to prevent companies incurring unnecessary losses and the investment required to implement these is a fraction of the cost of actual losses. We combine security intelligence, law enforcement training, the experience of previous assignments and information gained from reformed criminals to create training and business solutions for what is now one of the fastest-growing threats to the UK retail sector.”


Editor’s note:

Ian Kirke is available for interview should you wish to find out more. Please call 0870 114 9999 to find out more.