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bottlenecks to organized retail in india, corporate misgovernance, frauds in indian retail, lilliput, management fraud, problems in growth of indian retail, reebok scam, scam by top management, scams in retail industry in india, subhiksha, vishal retail
This presentation details recent frauds in the Indian retail Industry. It discusses the perpetrators of such fraud (customers, employees and top management) and stages in the value chain most susceptible to fraud (Property acquisition, merchandise sourcing, third party vendors, accounting books).
Frauds in the indian retail industry
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The above presentation focuses heavily on frauds by top management. In its 14th May, 2012 issue, Business World published this article about increasing incidence of thefts by customers and employees. Here are some excerpts:
‘Shoplifters can be professionals — dubbed “boosters” by the trade — or they could be amateurs, who have spotted an opportunity and taken it up. They could be good planners, who walk into a shop with the intention of stealing, or simply well-to-do shoppers who steal for the thrill of it when they spot an opportunity. They could even be children or adults who pick up and eat chocolates or other consumables on display and walk out without paying for the stuff. Or they could be employees who have colluded to systematically steal from their employer.
While employee theft is a big problem in both organised and unorganised retail, the former probably have to deal with more casual and professional shoplifters than the latter. In fact, analysts say that the advent of walk-in stores, with aisles piled with goods, and the concept of selfservice have helped provide opportunities that did not exist earlier. The fact that the cash counters are at one end of a huge room, the guards are often overworked, and there are changing rooms with no intrusive cameras recording what goes on inside makes it easy for the professional thief. Department stores and hyper-market formats are especially vulnerable as they cover huge areas, have relatively low staff-to-customer ratios, and have all manner of goods that are easy to conceal.
Fighting Back
As the Indian retail industry matures, the fight to reduce shrinkage to global levels has begun in earnest. Some of the bigger names already boast of shrinkages as low as 0.7 per cent or even lower. At Globus, the shrinkage is currently pegged at 0.69 per cent of the total sales of Rs 235 crore, says Nadkarni. According to him, the number — in the last three years — has come down from 0.7 due to improved security solutions in the country. The other factors that can check pilferage is investment in the right resources and having an effective management. “We are aiming to bring shrinkage to below 0.6 per cent this year; however, we (retailers) can never ever eradicate the problem from the system,” says Nadkarni.At Max Fashion, the Rs 400-crore company of the Landmark Group, the management claims pilferage numbers have been strictly controlled. “In our group, it is typically below 0.4 per cent, whereas, globally, in the organised retail industry, it is about 1.5 per cent,” says Vasanth Kumar, executive director of Max Fashion. He says pilferage was controlled through security guards, sensormatic security hard tags (AM technology) and billing controls. Of late, with advancements in technology, established retailers have introduced “on the shop floor” controls and monitoring or restricting inventory movements, general surveillance (CCTV), electronic recording of movements on the shop floor, RF technology security tags (both hard and soft tags) and perpetual stock cycle count.’
As the Indian retail industry matures, the fight to reduce shrinkage to global levels has begun in earnest. Some of the bigger names already boast of shrinkages as low as 0.7 per cent or even lower. At Globus, the shrinkage is currently pegged at 0.69 per cent of the total sales of Rs 235 crore, says Nadkarni. According to him, the number — in the last three years — has come down from 0.7 due to improved security solutions in the country. The other factors that can check pilferage is investment in the right resources and having an effective management. “We are aiming to bring shrinkage to below 0.6 per cent this year; however, we (retailers) can never ever eradicate the problem from the system,” says Nadkarni.At Max Fashion, the Rs 400-crore company of the Landmark Group, the management claims pilferage numbers have been strictly controlled. “In our group, it is typically below 0.4 per cent, whereas, globally, in the organised retail industry, it is about 1.5 per cent,” says Vasanth Kumar, executive director of Max Fashion. He says pilferage was controlled through security guards, sensormatic security hard tags (AM technology) and billing controls. Of late, with advancements in technology, established retailers have introduced “on the shop floor” controls and monitoring or restricting inventory movements, general surveillance (CCTV), electronic recording of movements on the shop floor, RF technology security tags (both hard and soft tags) and perpetual stock cycle count.’
Charu Says 