Beware Retailers: Economic Slump No Deterrent to Thieves

November 19, 2008

The contracting U.S. economy might be keeping a lot of shoppers away from the mall, but at least one group is appearing more often — thieves.

Shoplifting and employee theft have been on the rise this year as the economy weakened and the trend is likely to accelerate during the holiday season, retail and security experts said.

“We believe that such an increase is very likely,” Rob van der Merwe, chief executive of Checkpoint Systems Inc., said about a holiday theft spike.

“People are used to a certain ‘lifestyle’ and will try to maintain it, even if they lose their jobs or find themselves with a lower paying job due to the recession.”

Checkpoint sells anti-theft tags, surveillance systems and other services to help retailers reduce “shrinkage,” the industry term for theft and other forms of lost inventory.

Retailers were already seeing signs of increased theft as early as this spring, months into a U.S. housing slump that has since gotten worse.

A financial markets crisis that erupted in September has thrown the U.S. economy into its worst state since the Great Depression, putting a new squeeze on consumers with job losses and even tighter restrictions on individual lines of credit.

In April, 74 percent of 116 retailer executives surveyed by the National Retail Federation said they had seen an increase in shoplifting for the year and 79 percent said they saw a rise in employee theft.

Those trends continued in October, retail executives told the NRF. But they also said thieves were becoming more aggressive, according to Joseph LaRocca, vice president of loss prevention with the industry trade group.

“The crimes have increased, the frequency has increased, but also the aggressive nature, the need to get away has also increased as well,” LaRocca said.

U.S. retailers lost $34.8 billion in 2007 due to theft, or almost 1.42 percent of their inventory, LaRocca said. That amounts to about $350 per household, or about 1.5 cents per every dollar spent at retail as store owners try to recoup those costs.

“It’s almost like a hidden crime tax,” he said.


With U.S. unemployment at a 14-year high, pressure to steal may be on the rise.

“Unfortunately, these individuals who make the choice to steal from stores in many cases are being prosecuted for stealing,” LaRocca said. “It’s no more right to come into your home and steal your food … than it is to go into a store and steal.”

Among the most commonly stolen items this year are infant formula, over-the-counter drugs, cosmetics and clothing such as designer jeans, LaRocca said.

Retailers have seen increases both in common shoplifting and in organized retail crime, where groups of thieves steal large amounts of products to resell them at flea markets, on street corners and online. Those thieves are likely to find more buyers in a recession.

“As the economy toughens, there are consumers … they’re more aggressive in their bargain hunting, so they are resorting to some more nontraditional places that they will try to buy their goods from,” LaRocca said.

They also are looking for something to eat.

Almost three-quarters of respondents in a September poll of food industry loss-prevention executives at retail, wholesale and vendor companies said theft increased over the last three to six months.

Food retailers are the most likely to have noticed rising theft, according to the Food Marketing Institute poll.

Meanwhile, as sales dwindle, retailers are also cutting back on personnel, including, in some cases, the security personnel responsible for preventing theft.

Companies are “looking at loss prevention effectiveness to see if they can make due with less,” said Rick Childs, a managing director and retail industry expert from risk management consulting firm Protiviti.

But with fewer shoppers expected in stores this year as consumers cut back, retailers are also willing to risk getting by with fewer security people, he added.

(Editing by Andre Grenon)

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