Shredder Sales Soar in U.S. in Era of ID Theft
Reuters
By Michael Flaherty
NEW YORK (Reuters) - Yuri Fernandez discovered recently that a stranger could snatch bills and receipts from his trash and empty his bank account.
To avoid that possibility, Fernandez, 32, did what a lot of other people are doing nowadays: He went out and bought a shredder.
"I really need one of these," said the Broadway theater worker eyeing a $35 shredder at Staples Inc. in New York City.
The rise in identity theft, while a nightmare for tens of millions of Americans, has done wonders for the shredding industry.
Last year, sales of shredders jumped 50 percent at Staples and 30 percent at Office Max, a retailer owned by Boise Cascade Corp. .
Fellowes Inc., a closely held Itaska, Illinois, company that makes shredders, reported sales up 25 percent.
The boom in document destroyers goes hand-in-hand with a surge in crimes involving stolen personal information, from credit card accounts to Social Security numbers.
An estimated 27.3 million Americans have been victims of identity theft over the last five years, including 10 million in the last year alone, according to the Federal Trade Commission.
The FTC reports that identity theft cost consumers $5 billion in out-of-pocket expenses last year, and businesses and financial institutions nearly $48 billion.
Commercial shredding is also booming, as many companies have become more vigilant.
"We've seen a double-digit growth as an industry in the last year. It's definitely a boom time for people in the business," said Robert Johnson, executive director for the National Association for Information Destruction, a Phoenix-based trade group for commercial shredders.
New privacy legislation, coupled with the collapse of Enron Corp., the bankrupt energy giant fighting criminal charges that include the unlawful destruction of company-related materials, has prompted other companies to adopt a shred-all policy, he said.
"It's when companies have a shredding party at 11 p.m. on a Saturday that raises suspicion," Johnson said. "So to stay out of trouble, a lot of companies are shredding everything all the time, the same way."
Such policies have spawned the mobile shredding industry, where companies are hired to arrive on site to destroy documents. And it has prompted Brink's Co. security systems and uniform maker Cintas Corp., as well as several other companies, to enter the field, Johnson said.
SHREDDING PARTIES
Shredders have grown in popularity since their invention in the 1930s, gaining historical prominence with the destruction of documents at the besieged U.S. Embassy in Tehran in 1979 after the fall of the Shah of Iran and the Iran-Contra arms sales testimony in the 1980s. More recently, there was the Whitewater real estate partnership probe involving former President Bill Clinton and his wife, Hillary.
But the best free advertising enjoyed by the shredding industry recently has been the campaign in the last year to provide awareness of identity theft.
Thus, in a sign of the times, Staples Inc. no longer has ribbon cutting at new stores. Its grand openings now feature a ribbon shredding ceremony.
Shredders, after all, are one of the company's hottest items with 1.3 million units sold in 2003 -- a more than 50 percent increase from a year earlier.
Other retailers like Office Depot Inc. and Wal-Mart Stores Inc. have also seen shredder sales soar.
"It's an item that a lot of people still don't have but are aware that they probably need," said Karen O'Neil, a Staples spokeswoman, noting that the market opportunity for personal shredders is "huge" with only 20 percent household penetration. She also credited marketing campaigns by banks to raise awareness of identity theft as a boost to the shredding business.
And shredders are not only coming with more components, they have dropped in price by as much as 20 percent in the past five years, O'Neil said.
Last week, Staples' newest New York City store sold out of its $70 "Executive Disk Shredder," which cross-cuts paper (up to seven sheets at a time) and gobbles up CDs, DVDs, floppy discs and credit cards. A smaller, 5-sheet version was selling for $35.
One shopper browsing these models said he has owned a shredder for 15 years. The shopper, who asked not to be identified, said he wasn't in the market for a shredder. But at the listed prices, he was tempted.
"Holy cow," he said. "What a bargain."
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