The report, ‘The 2012-2013 Global Theft Barometer’, suggests that global shoplifting and employee theft increased overall, with cosmetics items with high resale value, such as razors and color cosmetics, being particularly likely to be targeted by criminals.
Emerging markets such as Brazil and Mexico were particularly badly affected, with the country jointly reporting the highest overall rate of shrinkage (losses due to theft or administrative problems) in the world.
Despite shrinkage rates in the beauty industry being relatively low in America, beauty and health retailers reported a particularly high rate of shoplifting, which the study suggested may account for the perception of greater losses in those businesses.
Research indicates that the presence of stolen cosmetics on the market undermines legitimate brands’ image and price points and can become a major issue for beauty companies.
Causes of ‘shrinkage’
Retailers in the US pointed to several causes for the increase in theft, including consumers attempting to maintain their living standards despite shrinking budgets and an increased demand for stolen goods.
Products such as razor blades and color cosmetics are consistently targeted in general retailers due to their high resale value and ease of concealment.
One important factor in the increase in thefts is the rise of sites like Gumtree, which allow consumers to quickly and conveniently re-sell shoplifted products.
Cosmetics and beauty products were targeted both for resale and for personal use, with a higher proportion of goods now being stolen by professional gangs and organized crime groups than previously.
Undermining brands
According to a report by Dutch researcher Professor Diana Siegel, cosmetics stolen by organized gangs are frequently sold on at prices which undercut legitimate retailers.
Regarding thefts of cosmetics in Dutch territories, she commented to CosmeticsDesign.com USA: “If a tube of mascara is sold for €20 the thieves will steal it and sell it to the market vendors for €4, who can then sell it on for €12-14.”
Stolen cosmetics also undermine brands because they are often retailed past their sell-by-date or in containers which have been improperly stored.
Emerging markets concerns
Mexico was highlighted as a particular problem area for shrinkage with an average rate of 1.6% per year- one of the two highest reported in the world.
The main cause of this effect is believed to be criminal gangs, who often enter stores and target specific products for theft, including cosmetics. Retailers also reported a high level of highway robberies on delivery trucks. This increased rate of theft has occurred despite the country’s rising GDP.
In Brazil, sun protection was the product most frequently stolen at drug stores and pharmacies, with color cosmetics being in the group of most stolen products overall. Shoplifting was the most common method of theft.