Canadian retailers continue to experience challenging times with difficult domestic and

Canadian retailers continue to experience
challenging times with difficult domestic and
global economies, changing consumer behaviour
and an increasingly competitive retail landscape.
Securing the
bottom line
Canadian retail
security survey
2012
www.pwc.com/ca/retailsecuritysurvey
ii
Canadian retail security survey 2012
Executive summary
Canadian retailers continue to experience
challenging times with difficult domestic and global
economies, changing consumer behaviour and an
increasingly competitive retail landscape. While
changing economic conditions will persist to greatly
impact retailers, the results of our security survey
for 2012 show signs of relative stability, as retailers
redefine the role of loss prevention, the activities
used to monitor threats and deal with criminal
activity. The responses for the survey indicate that
Canadian retailers are continuing to protect
themselves against internal and external criminal
activities and other sources of loss.
Retailers indicated that they employ theft
prevention policies and procedures for internal and
external theft, vendor or supplier fraud and pirating
of intellectual property. Used in conjunction with
new technology and proven theft prevention
methods, most Canadian retailers have the
capability to monitor and control recognized theft
risks. While retailers stated that internal and
external theft are the most impactful criminal
activities to their organization, credit and debit card
fraud (including Pin Pad tampering) and return or
gift card fraud are also significant security issues.
Although retailers continue to leverage a
combination of policies, monitoring procedures and
enhanced loss prevention technologies, respondents
still reported shrink rates that ranged from a low of
0.4% to a high of 2.19%. The average shrink rate for
all respondents was 1.04%, slightly lower than the
1.13% result in the 2008 survey. By our estimates,
total shrink dollars for Canadian retailers has
increased since our 2008 survey to approximately
$4 billion. For total retail in Canada, this equates to
an average shrink of $10.8 million per shopping day.
To put these numbers into perspective, total shrink
dollars is close to the total investment levels made
by all Canadian retailers in Information Technology
(IT) and exceeds investments in Finance
department functions. However, unlike IT and
Finance function investments, shrink provides no
benefits to retailers, and requires significant time
and resources to identify, manage and prevent.
Simply put, shrink has a significant bottom line
impact that must be minimized wherever possible.
Compared to the 2008 survey results,
notwithstanding differences in the respondent base,
the average shrink rates for retailers who are in the
$1 billion plus range has increased. Although there
was a reported increase in shrink rates for retailers
in the $1 billion plus range, overall results have
remained steady since our last report. Continued
investment in people, processes and technology
seem to have prevented shrink rates from rising as
the retail trade has grown by $44 billion in Canada
since fiscal year 2007.
The survey shows that estimated external theft has
significantly decreased its portion attributed to total
shrinkage, while internal theft estimates have
significantly increased. This suggests that while
retailers have made positive strides in reducing
theft through their investments in loss prevention,
the need for strong internal policies and procedures,
as well as performing pre-employment screening
and background checks before hiring new staff will
be important measures to reduce losses and control
theft risks.
While retailers today are continuing to take action
against both external and internal theft, how action
is taken has changed to some degree. Although
respondents indicated that they are more often
confronting and issuing verbal warnings to
employees and customers caught stealing, at the
same time they indicated that their appetite to
pursue criminal charges has decreased. Likely a
result of the difficult economic conditions since
2007, retailers are choosing less costly and severe
options in these circumstances.
As criminal activity continues to evolve in more
sophisticated and organized ways, companies will
need to continue their investments in loss
prevention to ensure that benefits achieved are
sustained and shrink rates continue to improve.
Canadian retail security survey 2012
1
1
Executive Summary
3
Survey information
4
Section 1
Profile of respondents
2
Canadian retail security survey 2012
6
Section 2
Retail theft
10
Section 3
Inventory counts
14
Conclusion
16
Appendix
Survey information
Timing and dates
Comparability to previous surveys
Survey information was collected in August and
September 2012, and is based on the respondents
2011 fiscal year. Responses were anonymously
obtained using confidential web-based survey
application software and therefore information was
provided by respondents on a voluntary basis.
Where possible, comparisons and analysis were
made to the 2012 Canadian Retail Security Survey
results using data generated from PwC’s last loss
prevention survey conducted in 2008. However, due
to fluctuations in our respondent base, we
acknowledge that there are inherent limitations in
our ability to isolate changes in results (2008 to
2012) strictly to trends in the market and the
change in the profile of respondents from then until
now. In addition, the relative short history of this
survey (2007, 2008, 2012), also makes trend
analysis difficult since it is commonly accepted that
trends are patterns that are proven to exist over
multiple years.
Respondents’ profiles
Respondents to the survey included vice presidents,
directors and managers within the Loss Prevention
or Security functions of some of Canada’s leading
retail organizations. To the extent it was applicable,
owners and other management staff of smaller
retail operators also participated in the survey
targeted at the smaller market retail segment.
Compilation of information and results
Information was provided by respondents in an
anonymous and confidential format. Responses to
survey questions were compiled and analyzed by
PricewaterhouseCoopers LLP (PwC) with assistance
from the Retail Council of Canada (RCC).
Certain statistical information provided by
respondents was analyzed in comparison to survey
questions requiring similar information to ensure
consistency of the responses obtained. These
analytical procedures permitted the correction of
clerical errors noted on the submission of responses
by respondents (i.e. decimal places and use of
percentage symbol).
Please refer to the “Profile of respondents” section
for more information on changes to respondents
from 2008 to 2012.
Overall 34 retailers, representing approximately
16% of 2011 retail net sales (excluding new and
used automotive sales) as estimated and reported by
the Retail Council of Canada, responded to our
request for participation. However, the rate of 16%
includes some respondents who did not report their
net sales in the survey. Assuming the undisclosed
net sales reflected the average of the disclosed
respondents, our projected participation rate would
be approximately 24% of 2011 retail net sales before
new and used automotive sales in Canada.
Canadian retail security survey 2012
3
Profile of respondents
Retailers who responded reported 2011
average net sales of $2.540 billion, with an
average of 48 employees employed at each
store and 14,407 across Canada, and a
median of 20 and 3,587 employees
respectively. The retail categories of the
respondents are included in Figure 1. It
should be noted that 21% of respondents
also operate franchise operations in
addition to their corporate owned stores.
Where applicable, the franchise operations
results are included as part of the survey
results.
Due to fluctuation in the respondent base,
we are limited in the comparisons that can
be made between the survey results as
compared to 2008. We are confident that
the respondents represent the medium to
large retail segment based on the overall
store counts, overall employment figures
and average net sales as compared to
current published statistics within the
Canadian retail industry.
The product offering of the survey
participants is broken down in
Figure 2.
Loss prevention (LP) function
Respondents indicated that they dedicate
resources to the prevention of losses at their
locations. Capital and operating budgets
exist to invest in loss prevention measures
and technology designed to assist in
identifying and2012
preventing theft.
Thirty-six per cent of respondents identified
the senior director/director as the most
senior loss prevention positions in their
organization;
12% whereas 27% of respondents
18%
identified both the senior vice-president/
vice-president
and the manager positions as
6%
the most senior positions.
The direct line of reporting for the LP
function among our respondent group has
changed significantly since the 2008 survey.
Forty-six per cent of respondents’
LP
26%
26%
department leaders now report to store
operations, representing an 8% increase
since 2008. Eighteen per cent act as a
12%
stand-alone
1-24 function, reporting to the Audit
committee
25-50or the president, which is a
decrease51-99
of 11% from 2008. Twenty-three
per cent100-250
of respondents have Finance
251-500
overseeing
501 orloss
moreprevention, compared to
19% in 2008.
Figure 1. Type of retail category
15%
18%
12%
6%
6%
27%
9%
9%
Speciality boutique / Small box
Pharmacy retail
Big box Store
Department store
Grocery store
Service related retail (Movie theatres,
convenience stores, etc.)
Multi-channel
Hard-goods
4
Canadian retail security survey 2012
The survey identified that when LP reports
as a stand-alone function (i.e. report to
Audit Committee or president), the
estimated per cent portion of external theft
is highest. However, when LP reports to
store operations, the estimated per cent
portion of external theft is lowest. As store
operations generally have the most direct
impact on behaviour at the store level, we
believe this result is reflective of this reality.
When store operations are closely aligned
with loss prevention it appears the
enhanced focus on external theft
prevention measures pays off.
Overall, the average number of employees
working in the LP department for
respondent retailers was 35 − ranging from
1 to a high of 300 people. A median of
5.32% of retailers stated that they have
employees solely dedicated to manage
organized retail crime activities.
LP departments ranked shop and employee
theft as the two categories with the biggest
impact to loss prevention. Respondent
retailers are also greatly concerned about
high risk categories such as credit and debit
card fraud (including PIN pad tampering)
and return or gift card fraud.
The ability to identify and prevent
inventory shrinkage can be measured by
the total annual department budget for LP
activities as a percentage of sales. Retail
chains participating in the survey spent an
average of 2% of sales on loss prevention,
1.25% on capital, 1.13% on security and 1%
on third-party activities.
Figure 2. Type of products sold
Apparel
56%
12%
Automotive
parts / services
6%
2%
Electronics
38%
9%
Footwear
35%
9%
Grocery items including
food, beverage
29%
8%
Hardware
5%
Jewelry
15%
32%
8%
Alcohol
27%
1%
Music/DVD/CDs
32%
8%
Office products
21%
8%
Appliances
6%
Sporting goods
7%
Home & garden
18%
18%
21%
6%
Toys
35%
8%
None of the above
3%
0%
9%
20%
40%
60%
80%
2012
2008
Canadian retail security survey 2012
5
Retail theft
Retail shrinkage is the loss of inventory caused by different
sources such as theft by employees, customers or organized
crime, inventory counting errors, accounting errors, fraud
and damaged product loss. Respondents reported the
following shrink rates:
Shrink rates
6
Canadian retail security survey 2012
Sales Range
Low
High
Average
0-$500M
0.04% 2.19%0.95%
$500M-$1B
1.29% 1.29%1.29%
$1B-$5B
0.06% 2.00%1.20%
>$5B
0.58% 1.34%0.94%
Compared to 2008 results, average shrink
results were lower in the 0-$500M range by
0.29%, but higher in the $1B-$5B and >$5B
ranges by 0.36% and 0.07% respectively.
Although retailers in these two ranges saw
positive gains in the low range, the high
range was significantly higher, contributing
to an overall higher shrink rate in those
sales ranges. However, due to fluctuation in
the respondent base, we cannot definitively
state that shrinkage has increased industry
wide as compared to 2008.
Using the retailer total sales dollars
responses in conjunction with the reported
shrink rates, the statistics show that both
large and small retailers are dealing with
similar shrink issues and as a result are
exposed to a comparable level of shrink.
Notwithstanding the impact of the
merchandise mix, conventional thinking
would indicate that the >$5B retailers
would be exposed to a notably high level of
shrink than smaller retail operations.
However, this retail segment has continued,
since the 2008 survey, to invest in the
suitable mix of procedures, technology and
training programs to keep their shrink
levels near those of smaller retail concepts.
We also noted that 71% of respondents
reported shrink rates below 1.5%. The
remaining 29% of respondents reported
rates between 1.58% and 2.19%. This
breakdown is attributed to two elements
noted in the responses:
• the majority of respondents reported
having fewer than 500 locations –
representing a smaller location base to
manage and the ability to identify shrink
issues more easily than retailers with
greater than 500 locations
Merchandise categories
Given the diverse group of respondents,
25 different merchandise categories were
identified that contribute most to shrink
(see Figure 3). From these responses, the top
three identified (in order) were alcohol,
ladies apparel and cosmetics & fragrances.
As expected, each of these categories are
high volume and high value categories that
appeal to criminal activity, both internal
and external in nature.
• continued investment in loss prevention
programs by respondents reduces shrink
and ensures that shrink remains a
controlled expenditure
Respondents indicated that although the
average shrink rates in larger sized stores
has increased since the 2008 survey,
retailers are generally continuing to
maintain strong control over shrink levels.
However, given the increase in retail trade
in Canada since 2008, the reporting shrink
rates translate to approximately $4 billion
in annual loss to Canadian retailers.
Figure 3. What are the top 3 merchandise
categories that contribute most to shrink in
your company?
Alcohol
Garden
Women’s Apparel
Gloves
Cosmetics & Fragrance
Intimate Apparel
Health & Beauty
Jewellry
Denim
Ladies Accessories
Food/Confectionary
Lighters
Men’s Apparel
Lumber
Footwear
Pen
Handbags
Power Tools
Kids & Baby
Sporting Goods
Pharmacy/Blades
Sunglasses
Bath & Shower
Wallets
Electronics/DVD’s
Canadian retail security survey 2012
7
Figure 4. From the following categories,
what portion (%) is attributed to your
total shrinkage?
20122008
Internal theft
33.4%
19.0%
External theft
43.0%
65.0%
Paperwork errors
19.9%
16.0%
Vendor fraud
3.7%
Incident breakdown
The survey respondents estimated that 43%
of theft-related incidents are perpetrated by
external parties. This represents a
significant decrease since 2008, when the
reported percentage was 65%. The
breakdown of incidents is shown in Figure
4. Internal theft has increased to 33.4% of
all reported incidents from only 19% in
2008, while paperwork errors account for
19.9%, up slightly from 16% in 2008.
The 43% external theft suggests that
retailers have made positive strides in
reducing theft through their investments in
loss prevention. However, the 33.4% of
internal theft further emphasizes the need
for strong internal policies and procedures
as criminal activity gains momentum from
within the core of the retail operation.
The survey indicated that the average
number of external apprehensions and
recovered dollar amounts for all
respondents per annum at 1,533 and
$277,026 respectively. Internal
apprehensions and recovered dollar
amounts averaged 158 and $166,893
respectively for the respondent group.
These numbers align with the reported
increase in internal theft and suggest that
while retailers are working diligently to
decrease theft, greater emphasis will need
to be placed on internal loss prevention
activities.
Returns
Over the past decade it is well known that
many retailers have increased some of their
investments and attention from external to
internal theft prevention measures. As this
shift has occurred the per cent attributed to
each has also changed. With insight into
retailer’s operations and systems, dishonest
employees have the ability to do more harm
than typical shoplifters. As a result it seems
clear that investing in internal theft
prevention is wise.
In addition to shrink, retailers are also
exposed to fraudulent returns. Survey
respondents indicated that their estimated
refund-related theft averaged approximately
4.2% of all customer refunds.
Figure 5. Actions taken against employee theft
2008 and 2012
Confront / Issue a written
or verbal warning
41%
10%
88%
Charge criminally
80%
94%
Dismiss with cause
85%
71%
75%
Seek restitution
through civil action
Nothing
0%
0%
0%
20%
40%
60%
80%
100%
2012
2008
Confront / Issue a written
or verbal warning
77%
50%
65%
Charge criminally
8
85%
Canadian retail security survey 2012
Dismiss with cause
35%
35%
Policies and actions taken
against theft
The retail industry is the largest employer
in Canada. As a direct result, it is also
exposed to greater employee theft than any
other industry. Similar to our findings in
2008, all respondents to our survey this
year indicate having established policies
that define the consequences for employees
that are caught stealing. The pervasiveness
of such policies suggests a continued
strength in governance practices and in the
general retail and consumer market.
Consistent with the responses in 2008,
respondents to the 2012 survey indicated a
strong tendency toward prosecution of
employees caught stealing (see Figure 5).
However, there was a noticeable decline in
the tendency toward prosecution of
customers (see Figure 6). Approximately
Confront / Issue a written
41%
60% of the
respondents
indicated
they
or verbal
warning
10%
report incidents of theft by employees or
customers to law enforcement more than
Charge criminally
half of the time (see Figure 7). Forty-one per
cent of respondents stated that they
confront
or issue a verbal warning to
Dismiss with cause
employees when caught stealing, an
increase of 31% from the 2008 survey.
Eighty eight per cent of respondents charge
the employee criminally and nearly all
(94%) dismiss the employee with cause. In
the event that a customer is caught stealing,
respondents confront the customer 77% of
the time (an increase of 27%) and charge
the customer criminally 65% of the time (a
decrease of 20% from the 2008 survey).
Respondents seek restitution through civil
action 35% of time, the same result our
survey identified in 2008.
Interestingly, compared to the 2008 survey,
there was a notable increase in the number
of respondents that are choosing to report
incidence of theft less frequently.
Respondent retailers are leveraging the
appropriate policies to inform customers
while protecting themselves, demonstrating
that action will be taken and that theft will
not be tolerated.
Notwithstanding the differences in the
respondent base, we consider the likelihood
that given the difficult economic conditions
88%
since 2007, retailers
in some cases choose to
80%
avoid legal prosecution, instead choosing to
leverage employee termination
or barring a
94%
customer from their
stores
as
sufficient
85%
action taken.
0%
0%
0%
20%
40%
Figure 6. Actions taken
against
customer
theft
2012
2008 and 2012
60%
80%
100%
2008
Q25
Confron/issue a verbal warning
Charge the employee criminally
Dismiss the empolyee with cause
Seek restitution thorugh civil action
Nothing
71%
75%
Seek restitution
through civil action
Nothing
2012
Figure 7. Theft incidents reported to
law enforcement
Q26
18%
Confront / Issue a written
or verbal warning
77%
50%
65%
Charge criminally
85%
35%
35%
Dismiss with cause
Seek restitution through
civil action
Nothing
18%
24%
6%
18%
0%
0%
24%
18%
0%
20%
40%
60%
80%
100%
100% of the time
75% to 99%
50% to 74%
25% to 49%
Less than 25% of the time
2012
2008
Q30
Canadian retail security survey 2012
9
Inventory counts
Monitoring inventory is one of the most
proven methods to identify retail shrink.
Depending on the characteristics of the
inventory, number of retail stores and level
of automation in the supply chain, this
activity can be time consuming and costly.
Respondents to this year’s survey
indicated a wide range of tendencies (see
Figure 8) towards the frequency of
performing chain-wide physical inventory
counts that verify the existence of
merchandise as compared to recorded
amounts.
Seventy-six per cent of respondents
perform either annual or semi-annual
chain-wide inventory counts, while 6% do
not perform any chain-wide inventory
counts at all. Since the frequency of the
inventory counts is reflective of the size
and complexity of both the merchandise
and service offering, the response is
consistent with the profile of the
respondents with the majority operating
large retail operations. Only slightly more
than half of the respondents count high
loss locations more frequently than
chain-wide. Given the benefits of
monitoring inventory to identify shrink,
this represents a potential opportunity for
retailers to more quickly detect localized
shrink problems and execute loss
prevention efforts.
About one-third of respondents use
internal resources to conduct inventory
counts. The rest use external, third-party
resources.
10
Canadian retail security survey 2012
The promise of Radio Frequency
Identification (RFID) as an enabling
technology to provide efficiency and
improved control over products still does
not appear to have been realized with
retailers in Canada. While only a small
number of respondents in the 2008 survey
indicated that they use RFID in their
organization to some extent, none of the
respondents in the current survey
indicated usage. While the costs of this
technology have continued to decrease,
overall implementation cost can still be
relatively high making it difficult to
support the business case, especially in
challenging economic times. However,
given the potential benefits that RFID
offers retailers—in reducing shrink,
improving inventory management and
expediting customer check out—we
believe it is inevitable that retailers will
re-examine investing in this technology
in the future.
Logistics and vendor controls
Approximately three-quarters of
respondents have a policy that defines
consequences for vendors, suppliers and
carriers that are caught stealing. Those
with a policy responded that their policy
specifically addresses elements such as
theft of intellectual property or
intangibles.
Responsibility for loss prevention
Respondents indicated that the main
responsibility for loss prevention falls
under three categories—physical security,
loss prevention store and head office level,
and logistics loss prevention (see Figure 9).
Despite the acknowledged differences in
the respondent base, the results in this
category differ from our 2008 survey
where 90% of respondents indicated that
loss prevention was responsible for loss
prevention at head office (including
financial crimes) and 57% indicated that
loss prevention was responsible for health
and safety. By focusing on fewer areas of
responsibility, loss prevention can better
achieve meaningful bottom line results in
crime related areas.
Hiring and training
For a number of years it has been common
practice to perform pre-employment
screening before hiring new staff. Fifty-nine
per cent of respondents perform preemployment screening before hiring new
staff. However, only 29% of respondent
retailers request new employees to pass a
police background security check as part of
the hiring process. This is approximately
half as many respondents in the 2008
survey. We consider budgetary pressure as
the likely cause for reduced background
checks.
The survey indicated that performing
pre-employment screening before hiring
new staff improves shrink attributed to
external theft. Pre-employment screening
helps identify less desirable employees –
those with a higher probability of being
dishonest and ultimately with a higher
potential of instigating criminal activity.
Candidates that pass this type of screening
are more likely to be watchful of external
and internal theft risks and take the
appropriate efforts to prevent it.
Figure 8. Frequency of inventory counts
I don’t perform chain-wide
physical inventory
6%
I don’t perform chain-wide
Monthly
physical inventory
6%
Quarterly
Monthly
0%
Semi-annually
Quarterly
0%
18%
18%
24%
Annually
Semi-annually
Annually
53%
24%
0%
20%
40%
53%60%
80%
100%
0%
20%
40%
60%
80%
100%
Figure 9. Responsibility for the loss prevention function
Loss prevention store level
Loss prevention head office
including financial crimes
Loss prevention store level
Logistics loss prevention
Loss prevention head office
including
financial
crimes
Risk
management
Logistics loss prevention
Health and safety
Risk management
Business continuity planning
Health and safety
Physical security
Business continuity planning
Food safety
Physical security
IT security
Food safety
Other (please specify)
IT security
91%
77%
91%
73%
77%
50%
73%
41%
50%
55%
41%
96%
55%
0%
96%
9%
0%
0%
5%
9%
20%
40%
60%
80%
100%
20%
40%
60%
80%
100%
5%
Other (please specify)
0%
Canadian retail security survey 2012
11
Responses showed that the majority of
retailers have store policies that
specifically address theft prevention or
security of assets (i.e. a minimum of two
staff to open and close store) or avoid
having employees work alone in your
store(s) or other areas of high risk (i.e.
warehouse). Slightly more than half of the
respondents identified that they do not
routinely rotate employee’s duties in stores
or other areas of high risk. However, for
retailers that do routinely rotate
employee’s duties, the survey results
indicated higher estimates of external
shrink. Lack of consistency of staff
(especially in a high shrink department)
would make it more difficult to identify
suspicious customers that return over and
over again. A lack of staff continuity
should make it easier for thieves to operate
for longer periods of time unnoticed.
A small minority of respondents actively
encourage employees to stop and detain
shoplifters. Respondents that routinely
encourage employees to take action have a
lower percentage of external theft.
Although the impact on shrink for these
respondents was positive, we believe this
approach must be carefully weighed
against employee safety, legal
requirements and the advice most
frequently provided by law enforcement.
12
Canadian retail security survey 2012
Most respondents provide training on
store policies designed specifically to
address theft prevention and/or security
measures. Highlights of previous internal
theft cases—with detail of the
consequences on both the company and
the employee—are increasingly used to
create awareness and ultimately deter new
employees from theft. Responses showed
person-to-person employee training
programs, as opposed to web-based or
video programs, is believed to be the most
effective method to educate on matters of
loss prevention. Despite its effectiveness,
respondents still resort to using online and
audio video nearly half of the time. As the
use of smartphones and tablets become
more common, we expect the usage of
computer-based training to supplement
person-to-person and continue to grow.
Preventative and detective
methods
Figure 10 indicates responses to questions
related to surveillance systems. Their
comparison to the 2008 survey responses,
suggest that retailers are investing more in
concealed tools to manage loss prevention
efforts. Respondents noted a sharp
increase in the use of closed circuit TV/
DVR recording systems, observation
mirrors and 1-800 tip lines to control
losses both in-store and in-warehouse.
Only 35% of respondents in the survey
stated that they frequently or always
leverage in-store merchandise alarms,
compared to 72% in 2008. This is likely a
result of retailers using the concealed tools
to keep shrink low while providing
customers better opportunities to interact
with merchandise and a more pleasurable
shopping experience.
Responses that indicated frequent use of
theft deterrent signage had a higher
estimated percentage of shrink from
internal sources. While signage provides a
visual deterrent that is assumed to
discourage external theft, we assume it is
less impactful as an internal theft
deterrent, especially in organizations
where internal controls are weak or
inconsistent. Frequent use of in-store safes
was also identified as positively reducing
shrink.
Figure 10. Activities used to manage loss prevention efforts
2008 and 2012
Store 2012
Warehouse 2012
Alarm systems
88%
Closed circuit TV/DVR recording systems
65%
Observation mirrors
12%
Fitting room attendants
24%
Mystery shopping programs
18%
Merchandise alarms
24%
Silent alarms
12%
35%
12%
18%
6%
12%
6%
6%
12%
65%
Greeters
12%
1-800 tip lines
12%
12%
6%
12%
6%
12%
39%
6% 6%
17%
11%
Merchandise alarms
26%
12%
28%
Greeters
12%
6%
41%
100%
100%
69%
5%
17%
17%
7%
11%
14%
23%
6% 5%
11%
11%
11%
72%
19%
73%
7%
22%
5%
7%
64%
7% 7%
7%
57%
7%
64%
7% 7%
72%
20%
14%
7%
100%
66%
74%
29%
14%
7%
13%
22%
22%
79%
29%
50%
11%
7%
13%
39%
17%
6%
Always – 95% of time
Frequently – 60% to 95%
Occasionnally 35% to 60%
Infrequently – less than 35%
Never – 0%
13%
20%
6% 5%
56%
0%
12%
100%
17%
6% 6% 5%
12%
0%
100%
17%
18%
67%
11% 5%
76%
26%
78%
Armored car deposit / pick-ups
6% 6%
59%
18%
Exception reporting systems
1-800 tip lines
21%
17%
Safes
Business watch / community watch programs
47%
82%
35%
5%
41%
Shop-theft deterrence signage
12%
7%
17%
67%
Drop safes
6%
28%
63%
24%
16%
12%
12%
82%
6%
16%
25%
24%
Silent alarms
41%
Warehouse 2008
94%
Fitting room attendants
12%
29%
100%
Alarm systems
Mystery shopping programs
24%
12%
41%
Store 2008
Observation mirrors
35%
47%
6%
76%
29%
0%
Closed circuit TV/DVR recording systems
24%
6% 6% 6%
18%
24%
29%
88%
24%
65%
Armored car deposit / pick-ups
71%
94%
6% 6%
18%
12%
6%
6%
18%
12%
18%
88%
18%
6% 6% 6%
12%
35%
6% 6%
12%
12%
76%
29%
24%
12%
24%
65%
Exception reporting systems
12%
6% 6% 6%
100%
82%
6% 6%
82%
47%
29%
Safes
Business watch / community watch programs
6% 6%
29%
12%
18%
29%
Shop-theft deterrence signage
6%
47%
29%
12%
94%
35%
6%
12%
18%
Drop safes
24%
6% 6%
0%
80%
86%
93%
100%
Canadian retail security survey 2012
13
Conclusion
14
Canadian retail security survey 2012
The 2012 Canadian Retail Security Survey demonstrates that Canadian
retailers have worked hard to keep shrink levels relatively stable while
operating in a challenging and changing retail landscape. Canadian
retailers are continuing to protect themselves against internal and external
criminal activities and other sources of loss.
Moving forward, managing internal theft,
controlling the supply chain and inventory
and competitive efficiency will be important
for retailers as they focus their efforts to
improve shrink results
The 2012 survey identified a significant
increase in the estimated percentage portion
attributed by internal theft to total
shrinkage. Retailers will need to address the
economic and cultural changes that enable
and drive internal theft and the potential
solutions to reduce its impact. Preemployment screening, training and the use
of concealed preventative and detective
methods will play an important part of the
retailer’s loss prevention toolkit. By reducing
internal theft, retailers will be able to
positively impact their bottom line and
ultimately become more competitive.
As the Canadian retail landscape continues
to evolve, increased competition from
foreign retailers will put more pressure on
all areas of the business to reach maximum
efficiency, especially those related to cost
containment. Increased retail rental/
property costs and price competitiveness
will force Canadian retailers to seek
meaningful approaches to reduce costs that
do not impact the customer experience.
Given the significant impact that shrink has
on the bottom line, managing and reducing
it will be an increasingly important
competitive advantage for Canadian
retailers.
The survey also suggests that there are
opportunities to leverage technology such as
RFID to identify and reduce store shrink.
Given the considerable costs to acquire loss
prevention tools, retailers will need to
examine the trade-offs of initial investment
and their potential benefits. Loss Prevention
departments that accurately identify the
root causes of shrink in their organizations
will be most effective in developing profiles
and strategies that best address those causes
in a prioritized manner.
Canadian retail security survey 2012
15
Appendix
2012
2008
Number of stores
How many employees, on average, do you
employ at each of your stores?
12%
18%
6%
26%
26%
1-24
25-50
51-99
100-250
251-500
501 or more
2012
2008
Less than 10
29%
10%
11-20
24%
20%
21-50
21%
20%
51-100
15%
20%
101-250
9%
20%
251-500
3%
10%
100%
100%
Total
12%
What province(s) and/or territories does your
store(s) operate in? (Select all that apply)
How many stores does your organization
operate in Canada?
2012
2008
Ontario
82%
11%
Quebec
59%
3%
Manitoba
62%
1%
Saskatchewan
59%
12%
Alberta
65%
11%
15%
18%
2012
2008
12%
1-24
26%
25-50
6%
51-99
12%
29%
B.C.
65%
3%
100-250
18%6%
19%
P.E.I
50%
8%
251-500
27%
501 or more
26%
19%
Nova Scotia
56%
12%
9%12%
18%
New Brunswick
50%
6%
100%
100%
Newfoundland / Labrador
50%
11%
Yukon Territories
21%
11%
Nunavut
6%
11%
Northwest Territories
24%
0%
Total
9%
5%
6%
Speciality boutique / Small box
Pharmacy retail
Big box Store
Department store
Grocery store
Service related retail (Movie theatres,
convenience stores, etc.)
Multi-channel
Hard-goods
16
Canadian retail security survey 2012
10%
Estimated impact of type of criminal activity
Total
Rank
Counterfeit bank notes
1
2
2
2
5
2
1
2
6
8
7
1
2
1
1
1
1
1
1
1
1
2
2
2
2
1
58
10
Credit and debit card fraud
including PIN pad tampering
1
2
6
1
5
8
8
5
9
7
6
1
5
10
10
7
8
2
10
8
1
1
1
4
4
2
132
3
Gift card fraud
1
2
1
2
7
9
8
4
1
4
4
1
5
5
7
7
8
3
6
3
1
2
1
2
2
1
97
5
Return fraud
8
2
4
3
7
8
8
5
2
2
2
2
7
5
4
7
3
7
9
7
2
10
5
2
2
4
127
4
Employee theft
10
2
8
3
8
8
9
6
6
6
6
8
9
7
3
9
8
7
7
10
8
6
10
8
8
10
190
2
Shop theft
10
2
4
10
8
9
9
7
6
8
8
10
9
5
5
9
4
7
8
9
10
4
8
10
10
8
197
1
Break and enter (typcially occuring
outside business hours
2
2
8
2
2
7
4
2
6
1
1
1
1
1
6
3
2
2
5
5
1
2
2
6
6
10
90
6
Armed robbery
1
2
1
1
2
9
2
2
1
1
1
1
1
1
9
7
2
1
2
10
1
1
1
2
2
1
65
9
Customer information theft
1
2
1
1
5
7
2
1
1
1
1
1
1
1
8
6
8
3
4
10
1
1
1
1
1
1
71
8
Vendor or contractor fraud
7
2
3
1
5
6
3
2
6
1
1
1
2
1
2
2
5
3
3
4
1
2
1
1
1
6
72
7
* 1 = least impactful, 10 = most impactful
Are your stores located in...
(Select all that apply)
What type of retail category best describes
your company?
2012
2008
2012
Strip malls/Outdoor malls
82%
17%
Specialty boutique / small box
27%
9%
Power centres
74%
18%
Pharmacy retail
12%
43%
Stand alone
77%
13%
Big Box store
15%
33%
Downtown main street
79%
17%
Department store
18%
Indoor Malls
N/A
19%
Grocery store
6%
Service related retail (movie
2008
6%
5%
Multi-channel
9%
5%
Hard goods
9%
5%
100%
100%
theatres, convenience stores, etc.)
Total
Canadian retail security survey 2012
17
Appendix continued
What type of store do you operate?
Which department in the organization does
loss prevention report to?
2012
2008
Corporate stores only
74%
76%
Franchise stores only
6%
5%
Both Corporate and
Franchise stores
21%
19%
2012
2008
Finance
23%
19%
Store operations
46%
38%
Human resources
5%
5%
Logistics
0%
Administration
5%
9%
Stand alone function (i.e. report to
Audit Committee or President)
18%
29%
Other
5%
Total
100%
100%
What is the most senior loss prevention
position in your organization?
18
Canadian retail security survey 2012
2012
2008
Senior Vice-President /
Vice-President
27%
28%
Senior Director / Director
36%
44%
Manager
27%
28%
Other
9%
Total
100%
100%
How many employees are employed by
your entire company in Canada?
Identify the types of products sold within
your stores. (Select all that apply)
2012
2012
2008
3%
Apparel
56%
12%
23%
Automotive parts/services
6%
2%
1,001-10,000
44%
Electronics
38%
9%
10,001-50,000
15%
Footwear
35%
9%
Greater than 50,000
15%
29%
8%
Total
100%
Grocery items including food
and beverage
Hardware
15%
5%
Jewelry
32%
8%
Alcohol
27%
1%
Music/DVD/CDs
32%
8%
Office products
21%
8%
Appliances
18%
6%
Sporting goods
18%
7%
Home & garden
21%
6%
Toys
35%
8%
None of the above
9%
3%
Less than 100
101-1,000
Canadian retail security survey 2012
19
20
Canadian retail security survey 2012
Contacts
PwC Canada
Retail Council of Canada
Paul Beaumont
Stephen O’Keefe
Canadian Leader,
Retail Consulting Services
Vice-President,
Operations
[email protected]
[email protected]
+1 416 869 2454
+1 416 922 0553 ext. 318
www.pwc.com/ca
www.retailcouncil.org
Canadian retail security survey 2012
21
About PwC
PwC Canada helps organizations and individuals
create the value they’re looking for. More than
5,700 partners and staff in offices across the
country are committed to delivering quality in
assurance, tax, consulting and deals services.
PwC Canada is a member of the PwC network
of firms with close to 180,000 people in 158
countries. Find out more by visiting us at
www.pwc.com/ca.
About the Retail Council
of Canada
Retail Council of Canada (www.retailcouncil.org)
is the Voice of Retail. Founded in 1963, RCC is a
not-for-profit association which represents more
than 45,000 stores of all retail formats, including
department, grocery, independent merchants,
regional and national specialty chains, and
online merchants.
www.pwc.com/ca/retailsecuritysurvey
© 2012 PricewaterhouseCoopers LLP, an Ontario limited liability partnership. All rights reserved.
PwC refers to the Canadian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. 3022-01 1012