Customer Shoplifting, Disloyal Employees and Supplier Theft Costs the World's Retailers $98.6 Billion.

Figure represents an annual 'tax' on honest consumers of $287.70 per household in the U.S. and Europe

THOROFARE, N.J. -- The first edition of the Global Retail Theft Barometer, conducted by the Centre for Retail Research in Nottingham, United Kingdom, and sponsored by Checkpoint Systems, Inc., offers the first attempt to put a price tag on retail theft across the globe. The study reveals new facts about actual levels of retail shrinkage and crime in 32 countries around the world, including 25 countries in Western and Central Europe, as well as the U.S., Canada, Australia, India, Japan, Singapore and Thailand.

Eight hundred and twenty retail companies, operating 138,603 stores with sales of U.S. $948 billion, provided the data used in this study. The retailers taking part represented 16% of total European retail sales, 13% of North American retail sales and 5% retail sales in Asia-Pacific.

The results from the 32 countries surveyed show that global retail shrinkage (stock loss from crime or waste expressed as a percentage of retail sales) cost retailers $98.6 billion, representing an annual 'tax' on honest consumers of $287.70 per household in the U.S. and Europe.

At the same time, the global costs of retail crime (the cost of theft by customers, disloyal employees, and suppliers and vendors, plus the cost of loss prevention) were $108.1 billion.

The largest source of shrinkage was Customer theft (shoplifting), responsible for 42.0% of losses, or $41.5 billion. Employee theft accounted for 35.2% ($34.6 billion), while 16.5% ($16.2 billion) of the global cost was caused by internal errors and administrative failures (e.g., pricing or accounting mistakes). Supplier or vendor theft and fraud are responsible for the remaining 6.3% ($6.2 billion). In the U.S., Canada and Australia, retailers reported that employee theft was higher than theft committed by customers.

Retailers have apprehended almost 6 million store thieves during this year, and 87.5% of these thieves were customers. North American retailers apprehended the largest number of employee thieves, while the majority of customer thieves (3,481,490) were caught in Europe.

"The results show that in all countries there are retailers who have managed to reduce shrink, while shrink has risen for others, regardless of regional location," explains Joshua Bamfield, Director of the Centre for Retail Research. "This suggests that lower rates are the outcome of strategy, policy and investment, not of factors related to the national environment."

"The phenomenon of shrink must be taken seriously in the context of a global economy," notes George Off, CEO, Checkpoint Systems, Inc. "Shrink cost has an immediate impact on the margins of the global retail industry - an industry on which the world's economy, particularly in many developing or recently developed regions, depends for growth and stability. Retailers worldwide are coming to the same conclusion: investing in shrink management solutions is seen as a priority and can provide a significant return on investment."

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Internal Theft

North American retailers apprehended a larger total and proportion of employee thieves than retailers elsewhere. The number of retail thieves in North America was 2.3 million (28.6% were fraudulent employees). Asia-Pacific retailers apprehended 110,000 thieves (9.1% of which were dishonest employees) and European retailers apprehended 3.55 million thieves (only 1.9% of which were dishonest employees).

The average cost of admitted or proven theft for shoplifters in North America was $622. In Europe and Asia-Pacific it was $112 and $54 respectively. However, the average employee theft incident in Europe cost $5,145 (reflecting large financial frauds), compared with $206 for employee thieves apprehended by Asia-Pacific retailers. During the survey period, theft and fraud by employees (internal fraud) cost U.S. retailers $18.3 billion and Canadian retailers $1.6 billion.

Responses from U.S. retailers indicated that 24.6% of internal theft was believed to take place at the checkout or cash desk, 43.2% on the sales floor, and 32.2% in the back office, delivery bay or stockroom.

In Canada the checkout was estimated to account for 44.5% of internal losses, while 23.7% of losses occurred on the sales floor, and 31.8% in the back office, delivery bay or stockroom.

Security Costs

Global loss prevention costs were $25.6 billion, or 0.35% of retail sales. Loss prevention spending in North America was $12.7 billion, equivalent to 29.3% of total shrink. U.S. operating expenses dedicated to loss prevention (LP) were $8.2 billion, while capital expenses were $3.6 billion; in Canada the figures were $0.7 billion and $0.2 billion, respectively. U.S. retailer spending on loss prevention represented 0.45% of retail sales and 0.40% in Canada. These figures exceed LP spending in most other countries - for example, European loss prevention spending was 0.34% of retail sales.

Asia-Pacific retailers spent $1.3 billion on revenue costs (payroll and services) and a significant percentage of their security budget went to capital costs (security equipment, IT and other long-term assets) of $877 million. As a percentage of sales, revenue spending was 0.11% of sales, with capital spending representing 0.07%.

Merchandise Protection

By the end of the decade, 69.3% of large retailers in Europe, 68.7% in North America and 47.3% in Asia-Pacific are expected to source tag merchandise. This is a dramatic increase from the percentage of retailers in the survey who currently use source tagging technology: 45.2 percent in North America, 39.7 percent in Europe and 27.4% in Asia-Pacific (including 40% in Australia).

The average number of product lines that were source tagged was 396 in North America (accounting for 21.3% of retail sales), and 219 in Europe (15.9% of retail sales).

The Centre For Retail Research

The first edition of the Global Retail Theft Barometer has been produced by Professor Joshua Bamfield, the Director the Centre for Retail Research (www.retailresearch.org) with the cooperation of Checkpoint Systems, Inc. The CRR is an independent organization providing research and consultancy for the retail sector dealing with the changing face of retailing and focusing upon retail fraud and crime. It has carried out extensive studies dealing with the costs of crime and the application of electronic and computerized systems to combat shop theft and fraud in many parts of the world.

Checkpoint Systems, Inc.

Checkpoint Systems, Inc. is the leading supplier of retail shrink management solutions. Checkpoint's global team helps retailers - and their suppliers - reduce theft, increase inventory visibility and provide consumers with greater merchandise availability through the company's rapidly evolving RF technology, expanding shrink management offerings and Check-Net labeling solutions. Checkpoint has more than one million RF devices installed in stores today and has secured more than 100 billion products. Scaling cost efficiently, Checkpoint's solutions provide increased revenues and profits to a fast-growing community of successful retailers, and a superior experience for their consumers. Listed on the NYSE (NYSE:CKP), Checkpoint operates in every geographic market and employs 3,200 people worldwide. For more information, visit www.checkpointsystems.com.

Notes:

The Centre for Retail Research and Checkpoint Systems will be hosting a web cast to present the study's key findings and to answer questions on Monday, November 19, 2007 at 1:00 PM EST. To participate, logon via the conference call link, which can be found at:

http://www.webcasts.com/otsp/checkpoint/

For hard copy B Roll request, please contact Bob Basmadjian at [phone] or via e-mail at [e-mail]

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