Big retailers feeling the effects of shoplifting

Big retailers feeling the effects of theft

A recent report by the Australian notes the “five-finger” discount is alive and well, now costing retailers $9.5 billion in lost revenue each year.

From grocery retailers to department stores and specialty shops, it seems no matter the size or budget, all retailers are equally at war with consumer theft.

Here’s an insight into what retail theft is costing some of Australia’s largest companies and how they’re changing the playing field to combat loss.

A major dent

The Australian Retailers Association recently told the Australian newspaper retail theft is now costing the sector an estimated $9.5 billion in lost revenue each year.

That’s a major dent in the bottom line of a sector that enjoys $310 billion revenue annually, with general statistics indicating it equates to an industry standard of between 2 and 3 per cent.

Association executive director Russell Zimmerman noted: “Different industries have different theft rates, so if you are running a retail footwear store where you only have right-foot shoes on display your theft is virtually zero.

“If, however you are running a supermarket and you have a self-checkout you are probably going to have a higher theft rate than the shoe store … it could be as high as 4 and 5 per cent.”

And it seems grocery stores with self-service checkouts are definitely feeling the heat.

On ongoing problem for Coles and Woollies

At Coles and Woolworths, the products might be groceries, but the hit to the company hip pocket is no small change. Here, a large proportion of theft comes courtesy of self-service checkouts, with industry experts estimating the phenomenon costs retailers billions.

While actual figures are hard to come by, the Sydney Morning Herald reports a British survey found more than £1.6 billion ($3 billion) worth of items are stolen from supermarkets every year, “with one shopper in five taking advantage of the opportunities for theft offered by do-it-yourself checkouts”.

Whether customers are under-ringing items by exchanging barcodes, scanning apples instead of avocados, or failing to scan items altogether, it’s such a phenomenon that retailers are investigating new and innovative ways to elicit greater honesty in their patrons.

News Ltd explains: “Researchers at Queensland University of Technology (QUT) are hoping to see if more subtle methods might guilt us into being less sneaky when we use self-serve”.

“They want to look into whether “moral triggers” and “extreme personalisation” will nudge us to being honest shoppers.”

Their investigations centre around checkouts that greet consumers by name and more closely resemble the human appearance.

Meanwhile, Convenience and Online Retailing notes new Australian technology offers fresh hope. It provides automated product recognition system with the ability to identity each product so customers aren’t able to cheat the system.

And in the interim, self-serving thieves are facing larger and larger fines.

News Ltd reports a German man was recently fined the $A326,000 for his “nefarious use of a self-service checkout”.

“The 58-year-old business man, who wasn’t identified, was convicted of theft by Munich’s district court after scanning $A73.50 of veal liver as cheaper fruit.

“While the fine might seem excessive, the court based it on the fact the man has a monthly income of $A37,500. He had also been caught cheating the system three times previously, while also having past convictions for theft and tax evasion.”

A rising trend

Seven News recently reported an upward trend in shoplifting that included a 27 per cent spike in theft in Sydney alone. Across NSW, Crime Statistics indicate the rate has risen by 5 per cent, but some areas fare worse than others.

“Fairfield in Sydney’s west has seen a staggering 43 per cent jump,” Seven News continued. “Strathfield and Ryde had 40.7 per cent and 37 per cent increases respectively.”

Meanwhile, recent incidents include the well-publicised footage of a mother apparently encouraging her children to ride off aboard $500 worth of scooters from a toy store at Miranda Westfield.

Increased focus and resources

The Australian explains the rise in theft comes as shoplifters enjoy greater access to information online and it’s prompting retailers to respond with additional resources and new technology.

“Shoplifters are also congregating on online social media forums where they swap advice on how to evade security measures, such as immobilising security tags, while also boasting about their latest hauls,” they state.

The grim reality of retail theft

While the estimated figure of shrink is $9.5 billion, the knock-on effect is much greater. Retail loss is often further factored into the cost of goods, meaning the actions of a few have very real repercussions for every consumer asked to fork out more for a product.

It also requires the retailer to remain continually on guard. Security systems of yesteryear may not withstand the internet-savvy thieves of today.

The answer is ongoing vigilance, best-practice security that extends from customer service right through to new era tags and CCTV, and an awareness that the playing field will constantly change.

You can learn more about the latest technology and what you as a retailer need to consider on the security front here.