Understanding and controlling retail theft

Abstract

Shoplifting is widespread in retail establishments, yet accurate data on its extent are not available. Most retail theft is established by audit rather than witnessed, hence it is not clear whether the theft is perpetrated by customers, staff or suppliers. A 2-3 per cent loss of sales to shoplifting can amount to about 25 per cent loss in profit. For some smaller establishments or those on otherwise tight margins, retail theft not only affects their productivity and competitiveness, but also threatens their economic existence. The costs of this crime are not merely confined to the front line. Consumers become the victims, subsidising losses through elevated prices. Ultimately, society as a whole suffers when business viability becomes vulnerable. Despite the significant problems posed by shop theft, there has been little systematic research into the issue in Australia. But it is only when we are armed with accurate information that we can look at effective preventive measures, which aim to minimise the extent of this Adam Graycar Director Ever since the 17th Century commercial revolution, which had a dramatic impact on urban retailing, people have been aware of the susceptibility of retailers to shoplifting. Its incidence appears to have skyrocketed since the 1950s, accompanying the movement from service to self-service stores necessitated by rapidly rising labour costs (Durston 1996). Although the increase in shop theft be explained largely by the increased opportunities, it has perhaps been exacerbated by the growth of consumerism and shopping as a pastime. Whilst shoplifting represents the most common indictable (Farrington 1999), and is a major problem for retailers, it is rarely regarded as a serious Some argue that the term shoplifting is a euphemism which has historically served to trivialise the incident in the minds of offenders and society generally, and hence there is a preference for the adoption of terms such as shopstealing or shop theft (Home Office 1998). Henceforth, we shall use the latter term interchangeably with retail theft to describe theft by customers from shops through the wrongful taking of merchandise, without paying for the goods, or without paying the full price. The unique aspect differentiating shop theft from other forms of theft, is a contextual one: the crime is perpetrated against stores and it occurs during operational hours (Krasnovsky and Lane 1998). A commonly held view is that as an offence committed against inanimate objects, stealing from shops is a victimless crime. It is this process of pseudo-criminalisation which is said to foster a culture of permissibility or tolerance, which in turn acts to perpetuate the activity (Warr 1989, Farrington 1999). The Extent of Shop Thieving Although it is technically classified as a property crime, the consequences of shop thieving are both real and human. It is estimated that retail theft amounts to a loss to retailers of approximately 2-3 per cent of their sales. When this is calculated as a percentage of profit it becomes nearly 25 per cent (Shapland 1995). Judging by overseas research, retail theft is a significant problem. It has been suggested that somewhere between $US8-10 billion were lost in 1996 by retailers in the United States (Hollinger et al. 1997, Ryan 1997). In the United Kingdom known shoplifting were found to total an average of 4,164,000 incidents with a loss of £656 million per year over the five-year period 1992-97 (Farrington 1999). However, a lack of detailed data makes it difficult to calculate the true costs. Unfortunately, official statistics simply aggregate all shop stealing, thereby making it impossible to identify the proportion of stock shrinkage attributable to customer theft. Shrinkage is the term used to represent the shortages in stock/ inventory, attributable to theft by customers, by employees, vendor fraud and clerical error, rather than losses as a result of burglary, robbery, arson damage and vandalism (Seider 1996). …