Shoplifting Has Become A $100 Billion Problem For Retailers
Charlotte NC November 22, 2022
Loss is an everyday part of the retail business – it’s even budgeted for. But when sales are low, and shrink is getting higher, it becomes unsustainable for businesses to keep their doors open.
Recently, retailers have been battling unprecedented losses. Organized retail crime (ORC) is running rampant. A National Retail Security Survey (NRSS) shows that total shrink in 2021 reported by retailers is now almost a $100 billion problem.
88% of retailers surveyed said that the pandemic resulted in an increase in overall risk for their company.
Retailers, on average, saw a 26.5% increase in organized retail crime incidents in 2021. Beyond theft of goods, eight in ten retailers surveyed reported that violence and aggression associated with incidents increased in the past year.
Violence in stores has been triggered by many factors, including labor shortages, payroll cuts causing less coverage on the sales floor, and issues surrounding the pandemic, such as mask mandates and employees trying to enforce COVID precautions. We read about many instances over the past two years of violence stemming from a difference of opinion on masking policies.
According to the survey, 37% of retailer’s shrink is due to external theft, followed by employee or internal theft at 28.5%, and process or control failures at 25.7%.
“The kind of theft that’s mostly happening isn’t run-of-the-mill shoplifting. It’s organized crime,” said Mark Mathews at the National Retail Federation.
The survey states that ORC groups target easily concealable, removable, available, valuable, enjoyable, and disposable items. The top categories of items that are being stolen are apparel, electronics, health and beauty, accessories, and footwear.
Items that are easy to conceal but have high-ticket value are getting stolen more frequently. As a result, some retailers are locking these items up, creating a barrier to purchase for paying customers – which, at times when sales are already down, isn’t a good thing. Not to mention that it hinders convenience for customers and creates a less enjoyable shopping experience. Relying too heavily on technological security measures can create an undesirable shopping environment.
In-store, e-commerce, and omnichannel fraud are all on the rise.
The NRSS states that, “Many offenders target multiple retailers. If these retailers are not collaborating with each other and law enforcement, then they will not be able to detect that offenses against their organization are part of a larger pattern of organized criminal activity. Fortunately, 62.3% of respondents reported participating in ORC organizations and associations.”
Retailers are implementing many strategies to prevent loss and mitigate risks, such as hiring security staff, installing security cameras, requiring manager approvals for any discounts, and investing in radio-frequency identification (RFID) systems. RFID is used to identify items using radio waves and transmitting data from the RFID tag to a reader, which provides accurate, real-time tracking data of inventory.
RFID can be utilized in many ways in retail, going beyond just keeping track of store inventory. It can also manage and track inventory in the supply chain, or identify and locate stolen products.
An AI based point-of-sale system can detect and deter ticket or price swapping in stores – where a lower-priced item’s ticket is placed on a higher-priced item. Cameras at self-checkouts can detect if the items seen on camera are not being scanned or if lower-priced items are being entered into the system instead.
We are seeing a shift towards intelligence-based loss prevention systems and that trend will continue into the future.
Forbes Magazine
