The losses, which are technically referred to as shrinkage in retail trade, are rising by the day due to what industry players fear could be a case of an emerging organised pilferage ring targeting local supermarkets.
Speaking during the first Kenya Retail Industry Conference organised by GfK, one of the world’s leading market research companies, Nakumatt Holdings Managing Director Atul Shah disclosed that local retailers are suffering immense losses estimated at more than 1.5 percent of turnover, due to increased cases of shoplifting and general store stock losses arising from theft.
Going by Nakumatt’s analysis, Shah explained that the emerging organised pilferage ring is targeting high value products such as electronic items, furniture items, baby food products cosmetics and general food items.
With the formal retail trade market estimated to be worth more than Sh200 billion, the industry could well be losing more than Sh3 billion annually to shoplifters among other loss avenues.
“What we previously thought to be small time cases of shoplifting has unfortunately evolved to become organized crime, leading to high shrinkage rates on our stockholding,” Shah explained.
“It’s extremely alarming to note that conventional in-store policing measures are not helping much and there’s an urgent need to review existing laws to make them more punitive both for shoplifters and also for employees tried under theft by servant clauses,” he added.
According to the 2011, Global Retail Theft Barometer (GRTB) produced by The Centre For Retail Research, employee theft and general stock losses due to internal systems errors last year exceeded Sh10 trillion in a study covering 1,187 global retailers.
The 2011 GRTB study conducted in 43 countries indicated that the global shrink rate grew 6.6 percent from 1.36 percent of global sales to stand at 1.45 percent, with India, Russia and Morocco emerging as the most affected countries.
At the same time and in a progressive move expected to fully entrench the role of retail traders in the local market, Shah has reiterated the need for retail trade sector players to consider forming an umbrella association to address industry concerns.
Shah noted that the wholesale and retail sector is the second most important economic driver in Kenya, having registered a 7.3 percent growth beating the manufacturing, building and construction, agriculture, transport and communication sectors, according to the 2012 national economic survey.