IndiaRetailBiz

Shrinkage, defined as the percentage of loss of inventory between manufacture and point of sale, is one of the major challenges facing the retail sector. Shrinkage occurs due to variety of reasons including shoplifting, employee theft, administrative errors and supplier fraud. The theft by employees, however, accounts for bulk of the loss (45 to 50 per cent) on account of shrinkage in the retail sector.

All retailers, big and small, though fearful of the scourge, refrain from making reference to impact of this menace that is affecting their bottom-lines.

According to an ET report, large retailers like the Future Group, Spencer’s Retail, Reliance Retail and Aditya Birla Retail, who are already working on very thin margins, however, have now decided to join hands with a view to combat the growing menace that is directly killing their profits.

According to the second annual Global Retail Theft Barometer 2008 Survey, which covered 920 large retailers across 36 countries, India had the highest shrinkage rate of 3.10% during the year, an increase of 6.9% over last year.

The group of large retailer, though fiercely competing with each other for garnering higher market share, will now collaborate and create a blacklist of employees who are found guilty of theft. Apart from theft, the list of employees to be shared among the group members will also include the names of those employees who quit their companies without giving prior notice. Employees will also be identified for indulging in unethical practices and rudely with behaving with customers.

The blacklisted employees will find it extremely difficult to get employment with another retailer once such lists are prepared and become available to members of the group.

In this context, it may be intersting to know that, IT industry, which faces major problem of data theft and misrepresentation by employees, has created a blacklist of employees who indulge in data theft and other unscrupulous practices. NASSCOM, the representative association of IT and ITeS sector has also created a ‘National Skills Registry’ with a view to verify the background and antecedents of IT professionals. These lists are regularly updated by the industry bodies for benefit of their members.

Retailers Association of India (RAI), the representative association of big and small organised retailers, according to the report, is also planning to create a list on similar lines. While, identifying delinquent employees, it hopes to initiate the process of verification of potential employees.