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10 Apr 2017
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Finally, some clarity around Retail Loss in the GCC

It is with great pleasure that I announce that the release of the very first GCC Retail Loss Prevention Survey that was recently conducted by Professor Adrian Beck of the Criminology Department at the University of Leicester, UK.

 

Having been employed in this field in the GCC for most of the last decade, I had formed several perceptions in relation to Retail Loss Prevention practices in the region. In the absence of any credible benchmarks, however, my perceptions and those of my colleagues simply remained to be pure speculation – that is until now.

 

It was, however, no great surprise that loss resulting from malicious factors such as external and internal theft are not the primary cause of Retail loss in the GCC – process failures, admin errors and damages are – and significantly so compared to other regions globally. This was expected given the sheer diversity of the workforce and the communication challenges that this presents.

 

I am pleasantly surprised by some of the other findings – most notably how many Loss Prevention Practitioners are driving the transition towards a more progressive Profit Improvement approach where there is a greater focus on process improvement and in leveraging the human element through increased training and awareness. It was also encouraging to see how many Loss Prevention Departments will spend a greater percentage of their budgets on training in the coming year.

 

Although it is reassuring that there is a perception that Loss Prevention is widely recognised as a business priority across the organisation, and receives the most support from the Operations function, there also seems to be a view that a large proportion of senior management is not particularly engaged with the topic. Furthermore, it is rather sad to see that the Buying / Trading, Human Resource, and Supply Chain functions are perceived to be the least willing to support the Loss Prevention agenda. This is unfortunate given the significant influence that they have on delivering loss prevention objectives.

 

The greatest revelation is, however, the fact that most Retailers value loss at cost while the common valuation methodology used by most international surveys is retail price. The impact that this would have is quite significant as there has always been a widely-held perception that shrinkage within the GCC is substantially lower than in most other regions. However, this has been based on a fundamentally flawed comparison using cost compared to retail. When comparing like-with-like, it concerns then that shrinkage, or retail loss, would be substantially higher than other regions. We must, therefore, ask ourselves as regional practitioners, “Have we been underselling the extent of the problem?” or “Have we possibly been over-estimating the efficacy of our loss prevention programmes?”. As uncomfortable as it might be to answer these questions, we need to do so in the interests of our stakeholders.

 

Whatever the response is to either question, as practitioners we now finally have a baseline that is relevant to the GCC region and which we can use to formulating a more scientific approach to solving Retail Loss.

Regards,

David Erasmus

Managing Partner