While several LP surveys have been carried out across the United States and Europe over the past two decades, there has been little reliable data available that was specific to the GCC. Acknowledging the regions status as a global retail powerhouse, we recognised the importance of identifying and sharing trends in regional LP practices. Our belief was that context specific information sourced from the region’s most reliable retailers would help set the benchmarks for local aspiration and improvement and enable informed decision making moving forward. We made it our goal to deliver the first ever regional study examining the causes and impact of Shrinkage in the GCC, publishing the GCC 2017 LOSS PREVENTION SURVEY that we were able to deliver thanks to our sponsors at MVP Tech, Axis Communications, Milestone Systems, Checkpoint and Resolver.
The survey yielded several intriguing insights into the perceptions of loss prevention in the region and gave clarity to the types of shrinkage facing Gulf retailers. We found that despite the lower levels of loss due to theft, shrinkage in the region was on average 1.7% of cost of goods sold (COGS). Interestingly, respondents to the survey identified that process failures and administrative errors were the largest causes of shrinkage (33%) in their organisations. This stands in stark contrast to other global regions where loss due to administrative error and process range from 13% to 16%.
This is however actually good news for the GCC as it means the power to reduce the predominant factor causing shrinkage lies within the organisation itself, namely, increasing the focus on training. The underlying cause of process failure and admin error in the GCC stems from the fact that the workforce is largely comprised of a non-English speaking expatriate’s that hail from diverse cultures and nationalities, and which often results in the breakdown of communication.
It is therefore encouraging that the survey also revealed that the GCC Loss Prevention practitioners had prioritised LP spend in 2018 on more effective training (38%) followed by an increase in Audit and Process Management tools (25%) that would enable early identification of process failures and a better understanding of underlying root causes.
The retail industry is quickly evolving, and the supply chain and risks associated thereto have fundamentally changed over the past decade. The GCC is not exempt from these conditions and have witnessed a rapid shift in consumer behaviour that is driving retailers to introduce omnichannel offerings. The omnichannel environment however brings with it a range of new risks, and therefore, numerous other causes of loss which are not measured by traditional “shrinkage” surveys.
It is also true that the traditional definition of “Shrinkage” is no longer fit for purpose in an omnichannel world. Forward thinking approaches which transform the essence of loss prevention as a function of profit improvement are becoming more widely embraced. This approach will be reflected in this year’s upcoming GCC Loss Prevention survey which aims to expand the focus on measuring loss across the physical and digital supply chain.
In 2017, we contracted a subject matter expert from the University of Leicester to administer the study and interpret the results. With the support of several regional sponsors, Jard contacted prominent retailers throughout the region and extended the invitation to participate.
This year, we intend on following a methodology that has been adopted by the “Laboratorio Per La Sicurezza”; an Italian association that brings together more than 40 Security (and Loss Prevention) managers of national and multinational retail sectors to share Loss Prevention best practice and insights. This methodology combines the academic rigour required to provide credibility to the research results while the local Security / LP practitioners interpret and provide context thereto.
To this end, we are currently in discussion with various Dubai based universities to administer the survey while we invite local loss prevention practitioners to reach out and get involved as we scale up our efforts to ensure that accurate, actionable loss prevention insights are available to the region.
Should you be interested in participating in the survey, please contact us on firstname.lastname@example.org