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Hidden Cost

Hidden Cost
The thefts of employees in Spain amount to 454 million euros per year

European distribution is winning the battle against store thieves, but the war against internal theft is still far from over. The figures published by the fifth edition of the European Theft Barometer in the distribution (sponsored by Checkpoint Systems, an anti-theft product identification and solutions company) indicate that employees cause 30% of the unknown loss (sum of internal and external theft and administrative errors). In Spain this type of crime is lower than the European average (26.4%) but it represents the significant figure of 454 million euros per year.

The study, based on 440 large retailers in 25 countries, fixes the costs of delinquency in the distribution for the inter-annual period ending in June 2005 by 32,400 million euros, compared to 33,000 million in 2004. This means that every European it pays 70.26 euros extra, the lowest rate since the barometer was first published in the year 2000.

Distribution in Spain invests 468 million euros in security, but the unknown loss still amounts to 1,720 million euros per year, equivalent to 1.28% of turnover. In Spain each inhabitant pays 48.41 euros more because of the costs caused by the unknown loss and the expenses in security.

According to the Barometer sponsored by Checkpoint Systems, 2005 was the third consecutive year of decline in the European average loss index as a percentage of turnover. This decrease was of 6.7%, going from 1.34% in 2004 to 1.25%. The total value of the losses for 2005 was 28,938 million euros, a figure equivalent to 219 euros per year for each European household.

The average rate of unknown loss varies between different types of business. Thus, fashion and home stores suffer the highest levels of losses.

The report makes clear a direct correlation between the spectacular increase in security technology expenditures - including the coding of products at the point of manufacture or "labeling at source" - and a decrease of 6.7 percent in total losses, a continuous trend since 2003.

This year the investments in the prevention of losses increased some 426 million euros, up to 7,633 million euros, 26 percent of which was allocated to electronic surveillance of articles and closed circuit television. This contrasts with the 300 million euros in 2004, when the decline in the loss ratio was 2.2 percent.

The European Barometer of Theft in distribution, the world's largest survey of crimes in retail establishments and the fifth survey conducted by the Center for Retail Research, shows dramatic reductions in terms of losses - theft , fraud and error - in the 25 countries surveyed, but an increase in thefts by employees.

For the first time, the author of the report, Professor Joshua Bamfield, took into account the new "social" costs of crime in retail establishments-those associated with the administration of criminal justice systems, fiscal losses, violence and disorganization in business - which increases the level of losses up to 46,000 million euros.

Although external theft is still the most important cause of losses in Europe, worth 14,248 million euros, internal thefts were responsible for a further increase in losses. At this point, the barometer registered an increase of almost one percent, to 29.9%, which indicates that internal theft is the cause of the loss of 8,663 million euros per year.

The report also reveals that the average amount of each case of intercepted domestic theft is 357 euros. This should worry retailers, since more than half of them (56%) have responded by saying that the use made of the data on internal crimes "is not entirely satisfactory".

But all this could be about to change, as the barometer made it clear that most retailers had already implemented, or had specific plans to deal with domestic crimes during the next two years. More than three-quarters (76 percent) are completing their new and temporary personnel instructions with severe anti-theft warnings.

The fifth report represents a more extensive example this year, since Iceland is included for the first time. The conclusions of seven of the Central European countries that joined the EU as part of the enlargement process were included last year
This year's survey is made up of 440 leading retailers from 25 countries with a combined turnover of 371,981 million euros. Among them, they have more than 24,500 establishments and represent 18 percent of the total retail trade.


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