Shoplifting is the practice of stealing merchandise from retail establishments. Unfortunately, shoplifting is a serious and persistent problem for most retailers. The results of an annual National Retail Security Survey were reported in the St. Louis Post-Dispatch. They found that shoplifting cost retailers an estimated $10 billion annually and that 30 percent of these losses are the result of organized retail crime. These professional shoplifters are of concern to retailers because they tend to steal higher priced items or work from the inside, through employees.
Nonetheless, the fact that 70 percent of shoplifting losses result from unorganized stealing means that attempts to stop these losses must focus on both professional as well as casual shoplifters. Among the most commonly stolen items are tobacco products, athletic shoes, brand-name clothing, small appliances, jewelry, leather goods, and food items.
The costs of shoplifting are many. Most obvious of these costs are the losses suffered by retailers. The inventory lost to shoplifters is only part of the retailer’s costs.
They also absorb the costs of increased security measures and higher legal expenses associated with prosecuting the thieves. But shoplifting also costs the community in which it takes place by affecting store location decision.
Stores in high-theft areas will often relocate and in so doing they end up contributing to the deterioration of these troubled areas. Finally, shoplifting costs consumers in terms of higher priced goods. “The cost [of shoplifting] is very high,” said business professor Ed Mazze in Providence Business News. “It cuts into the profit margin of the retailer and is paid for by the consumer. It requires stores to invest in more complex security devices.”
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The first step for retailers hoping to reduce their losses to shoplifting is to create a strong antitheft policy and publicize it among customers and employees alike. In preparing a policy, it is important to note that deterring theft is usually less expensive than apprehending and prosecuting thieves. In addition, retailers must be familiar with the shoplifting laws in their states, particularly in light of recent incidents involving the assault of alleged shoplifters by store security guards. Some states require individuals to exit a store before they can be accused of shoplifting, for example. Experts suggest that small business owners consult with local police or their insurance company to obtain assistance in setting up an antitheft program.
In order to address the problem of employee theft, retailers can use integrity questionnaires and conduct reference checks when hiring new employees. In addition, software solutions exist to help retailers detect point-ofsale errors and fraud. Another way that small retailers can help prevent shoplifting is to buy merchandise from established sources. In many cases, professional shoplifters steal from major retail chains and then resell the merchandise to small, local stores. A good rule of thumb is that if you are able to buy merchandise less expensively than a big chain, then it is probably stolen merchandise.
Retailers have a number of security measures available to them to help deter potential shoplifters. A good place to start is by training employees to recognize and report suspicious behavior. Visible security measures are another valuable way to deter shoplifters. Security gates in doorways, security cameras in obvious locations, and uniformed security guards patrolling the store are all strong deterrents. Many retailers choose to reduce the temptation to steal by putting items that have high theft rates behind counters or giving them electronic article surveillance (EAS) tags. These methods have drawbacks, however, because limiting customer access to items reduces sales, while applying antitheft tags to items is labor intensive.
A relatively new weapon in the fight against shoplifting is the use of source tags. A source tag is a type of EAS tag that is applied by the manufacturer—usually inside the container or packaging—rather than by the retailer. The usage of source tags is growing, particularly in the areas of health and beauty aids and over-thecounter drugs. Some source tags can be used for both security and inventory control. In the future, the technology might even be used for tracing stolen merchandise that is resold to other stores. “Source tagging helps us provide our valued customers with low-cost products and the perpetual inventory they are looking for,” Tom Coughlin, CEO of Wal-Mart USA, told Hallie Forcinio in Pharmaceutical Technology. “It allows us to enhance sales and focus our resources on how we can better serve our customers.”