Retailers in the Asia-Pacific region will experience both their highest sales and shrink distributions during the holiday season, according to the 2016 Retail Holiday Season Global Forecast.
The report boldly predicts that 32 percent of the losses of the region’s retailers will be due to internal and external theft, with apparel, children’s toys, holiday foods, electronics and cosmetics emerging the favorites among thieves.
Theft from internal sources (primarily via employee theft and other sales reducing activities) and external factors (primarily via shoplifting/organized retail crime), which is referred to as shrink by retailers, are also forecast to reach 28 percent of annual retail sales.
The study, underwritten by an independent grant from Checkpoint SystemsInc., was carried out by Ernie Deyle, a retail loss prevention analyst, and provides an analytical view of business risks that major retailers face during this holiday season.
The 13 markets covered in the report include North America, Europe and Asia, and include the US, Belgium, France, Germany, Italy, Netherlands, Portugal, Spain, UK, Australia, mainland China, Hong Kong and Japan.
“Building holiday inventories earlier and specifically for high-risk items may lead to increased sales reduction pressures, such as markdowns and shrink throughout the fourth-quarter,” said Mark Gentle, Vice President — Merchandise Availability Solutions Asia Pacific, Checkpoint Systems.
According to the study, Australia is expected to record the highest shrink loss for this holiday season among all the Asia-Pacific markets surveyed at 35 percent, followed by Japan (31 percent), mainland China (30 percent) and Hong Kong (30 percent). The rate is more than 30 percent higher than the first two quarters of the year.
In the Asia-Pacific region, the cost of retail loss to shoppers in 2016, as absorbed or passed on from retailers, is expected to be $32 per person on average, of which one-third will be incurred during the holiday season. These increases in losses place an enormous burden on retailers and, ultimately, on honest consumers who pay for it in higher prices.
“For most retailers, wholesalers and distributors, inventory — including the space to store it — is the largest single cost of doing business. While reducing inventory means lower costs, insufficient inventory leads to out of stock situations, lost sales and unhappy customers. Therefore balancing these two factors is critical to profitability and growth, particularly in omnichannel environments,” said Gentle.
“The use of advanced data analytic tools, inventory management strategies, along with technologies such as RFID will provide retailers with enhanced visibility to track merchandise as it moves through the supply chain to distribution centers, retail backrooms, and store shelves, helping retailers reduce losses due to shrink and other causes, ultimately increasing the financial contribution of each item.”