The Global Economic Crisis And Retailers’ Security Concerns: The Trends

This paper examines how the 2008-2009 global economic crisis affected retailers' spending on securi-ty and their losses due to theft, burglary, vandalism or arson. The main purpose of the research is to examine whether retailers were successful in allocating their funds to deal with security issues during and after an economic crisis. We investigate the role of firm characteristics, such as size, legal type, gender of owners and top managers, in influencing the level of perceived crime and security spending. Previous literature indicates that shrinkage due to theft, burglary, vandalism or arson is a threat to retailers. Loss due to theft, burglary, vandalism or arson increases in times of economic downturn as overall crime levels go up. We empirically examined the scientific problem, which is relevant to the profitability of retailers, by conducting Wilcoxon tests on data collected from twenty-nine Eastern European and Central Asian countries in 2008 and 2013. The focus of the study was Eastern European and Central Asian countries because Eastern European and Central Asian country governments have less resources to spend on combating crime compared to the developed countries and the impact of global crisis on theft, robbery, vandalism, or arson experienced by retailers might be more accentuated. Our empirical analysis indicated that fewer retailers paid for security after the crisis, and the retailers that paid for security spent less money on security. This is especially true for smaller firms, firms that are not part of a larger firm, sole proprietorships, and firms with no female owner. Fewer shareholding firms spent money on security post-crisis. Fewer retailers with male top managers spent money on security, but the ones that spent money, spent more post-crisis. Fewer retailers experienced losses due to crime post-crisis when compared to the pre-crisis period (except for partnerships, firms with five-to-nineteen employees, and firms with more than ninety-nine employees). Finally, retailers saw crime as less of an obstacle to their operation during the post-crisis period when compared to the pre-crisis period. This research has implications to the policymakers and retail managers by providing them the trends in crime and security spending for different retailer groups.