The National Retail Federation (NRF) recently reported that the industry experienced a significant increase in inventory loss due to shoplifting, employee theft, paperwork errors and supplier fraud in 2010. In fact, losses due to “shrinkage,” the industry term for loss, cost U.S. retailers over thirty-five billion dollars last year, a ten percent year-over-year increase.
While experts attribute the surge in theft to several factors, most notably chronic unemployment due to the poor economy, there are also other emerging dynamics at play. For one, retail crime is now becoming a highly organized activity with groups stealing vast amounts of merchandise. Technology is also enabling criminals to quickly and easily move stolen goods through sites like Ebay.
On its surface, the burden of retail theft appears to rest squarely on the shoulders of those merchants who are targeted. However, it’s important to note that consumers also share the load as much of the cost that is associated with shrinkage is passed on in the price of goods to help compensate retailers for crimes that take place in their stores.
Law enforcement is now focusing in on the issue. Earlier this year it was reported that 36 people were arrested in Phoenix for allegedly participating in a vast retail crime operation that stole high-priced merchandise from multiple stores and returned the items for gift cards which were later sold. In June, 16 people were arrested in Philadelphia after allegedly organizing a flash mob that stormed a Sears store and made off with assorted stolen merchandise. In San Diego, a group was caught after authorities charged them with steeling $1 million worth of merchandise from malls across the country.
Retailers are also stepping up their security efforts by turning to technology like RFID which is being added to packaging to help them manage loss. They are also increasingly turning to digital video surveillance to both identify and potentially help deter potential thieves.
Using stored video or the live feed directly from the store, retailers have been able to reduce employee and customer theft. What’s more, video provides proof of a crime and enables law enforcement officials to more effectively prosecute offenders. Some surveillance cameras today are small enough to be embedded in door frames and counter tops capture increasingly accurate images of a person’s face and help identify them even when they are covering their face with a hat and sunglasses.
While new technology can help stem the tide of retail theft, there are also common sense preventive measures that can be put in place as well. Good store management, careful store layout, thorough inventory controls and smart security practices can all help control shoplifting. It is important for retailers to incorporate effective security practices into their store policies and procedures to prevent theft and build a more profitable enterprise.