2nd ECR Europe Shrinkage Survey (2004)



This report details the findings from the second ECR Europe survey on stock loss in the fast moving consumer goods (FMCG) sector in Europe. It is based upon a survey of retailers and manufacturers throughout Europe addressing: the extent, nature and impact of shrinkage; methods of recording shrinkage; responding to the problem; and working with others. The data covers retailers from 18 countries with a combined turnover of €137.2 billion.

SHRINKAGE IN THE FAST MOVING CONSUMER GOODS SECTOR


  • The cost of shrinkage is enormous, with an annual price tag of €24.17 billion. This is equivalent to €465 million per week and accounts for 2.41 per cent of market turnover.

  • Of the three main areas within the supply chain that are particularly vulnerable to loss, they accounted for:


Manufacturer distribution - €5.68 billion
Retail distribution - €1.20 billion
Retail stores - €17.29 billion

SHRINKAGE IN THE EUROPEAN RETAIL SECTOR


  • Throughout Europe, stock loss accounted for 1.84 per cent of turnover equating to losses of €18.49 billion a year.

  • Most respondents estimated that the majority of their loss was unknown (51%), with a slightly smaller proportion being estimated as known (49%). This was a significant increase on the last survey for the extent of loss that was known.

  • When considering all losses retailers perceived the main threat to be from external theft (38%), followed by process failures (27%), internal theft (28%) and supplier fraud (7%).

  • When considering only known losses, retailers perceived the main threat to be from process failures (54%) followed by external theft (26%), internal theft (15%) and supplier fraud (5%).

  • 93 per cent of losses occurred in stores (€17.29 billion). Just 7 per cent is thought to occur at the retail distribution centres or while goods are in transit (€1.2 billion).

  • Most European retailers calculate stock loss at retail prices and include known and unknown losses, traditional process failures (such as out of date stock, price mark downs and damaged stock) and losses incurred at retail distribution centres (RDCs).

  • One-third of respondents did not collect company-wide information about stock loss. It would seem difficult for these organisations to develop a strategic overview of the problem of shrinkage, something which is necessary if Board level support is required.


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