Thai retail industry inventory loss 32.25 billion bht

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Inventory loss reaches Bt32.25bn

The Thai retail industry raked up the second-highest inventory loss among its peers in Asia Pacific, with total loss of US$1.05 billion or Bt32.25 billion during July 2010 to June 2011.

The loss, caused by customer, employee or supplier/vendor fraud as well as administrative errors, is equivalent to 1.22 per cent of sales. For five years, Thailand’s losses have been the second-highest, according to the Global Retail Theft Barometer.

The Thai retail industry also spends the lowest ratio of revenue in Asia-Pacific on loss prevention and security. These costs as a percentage of sales amounted to just 0.13 per cent, demonstrating the strong inverse correlation between investment in security/loss prevention and shrinkage.

"Retailers around the world are going to continue facing security and inventory pressures because of all the strains on the global economy, such as rising commodity costs, inflation and unemployment. Thailand is a good example of the importance of investing in retail security and loss prevention. The country spends the least in Asia-Pacific on these measures, and as a consequence, it suffers the second-highest shrink rate in the region. This issue is only going to continue as the global economy struggles to recover," Paul Chu, president for Asia-Pacific, for Checkpoint Systems which conducted the survey.

The loss rose 4.5 per cent compared to the previous year, among the highest rates of increase in the region. The highest contributor to total shrinkage was customer theft, which accounted for nearly 50 per cent, below the Asia-Pacific average of 53.3 per cent. Employee theft contributed to 24 per cent of shrinkage, slightly above the regional average of 22.7 per cent. Internal error resulted in 19.6 per cent against regional average of 17.1 per cent) while supplier/vendor fraud made up 6.8 per cent against regional average of 6.9 per cent.

Thai consumers and their families compensated for the retail losses by paying an "honesty tax", or increased prices, at an average of Bt461.28 (US$15.02) per head, or Bt1,665.76 (US$54.24) per family.