UK retailers see fraud losses increase by 10%

Fraud losses increase

UK retailers saw losses due to theft and fraud increase by 10% on last year, rising to GBP3.4 billion which is equivalent to 1% of total sales, new research has found. The Retail Fraud Study 2012, conducted by research company, Martec International, interviewed loss and fraud prevention professionals from approximately 100 of the UK’s top retailers, including Tesco, Marks & Spencers, John Lewis and HMV, accounting for 42% of the UK retail market. The report found that online purchases now account for 9% of total sales, online fraud now accounts for 4% of all retail losses and 40% of internal retail fraud is reported by staff, which highlights the importance of promoting a culture of loss prevention.

It is common that in times of recession theft and fraud increases but this activity has cost UK retailers £3.4 billion in the space of a year. Worryingly for retailers 22% of this was due to theft by their own staff highlighting the importance to retailers of installing a positive culture to prevent losses. These surprisingly high losses come against a back drop of a difficult trading period creating more uncertainty for UK retail,” said Frances Riseley, Martec’s deputy managing director.

In addition, the study found that spending on loss prevention by retailers fell from 0.8% of sales to 0.7% last year seeing shrinkage increase to 1.0% of sales from 0.9% of sales the previous year. This increase indicates that losses are now almost matching retailer’s profits which pre-tax average 1.5% of sales, a worrying sign for the UK retail market.

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