Crime prevention series

Introduction {to Preventing retail crime

Published in:
Preventing retail crime
Susan Geason and Paul R Wilson
Canberra : Australian Institute of Criminology, 1992
ISBN 0 642 17047 9 ; ISSN 1031-5330
(Crime prevention series) ; pp. 1-6

Retail crime includes shoplifting, employee theft, fraud, robbery and violence to staff. Costs include loss of profitability, low staff morale, loss of work due to physical and psychological damage, and even loss of life.

How serious is the problem?

Shrinkage

In 1987, Coles-Myer, Australia's biggest retail chain, estimated that about 1 per cent of its turnover - $120 million - was lost to theft, that is, more than half its $219 million after-tax profit.

The Victorian Retail Association's guesstimate is that theft costs its members $70 million a year, while the police say shop thefts valued at $8 million were reported in 1987-88.

In the 1988-89 financial year Grace Bros security officers in 40 New South Wales stores apprehended 3,500 people, including staff. Thefts cost the store about $15 million per year. In 1987 the Coles-Myer Group - which includes Grace Bros, Coles New World, Fosseys, K-Mart and Target stores - announced that 45,000 people had been caught stealing. Of these, 1,400 were staff.

According to the Retail Traders' Association of New South Wales, the major department stores lose .875 per cent to 1.125 per cent per year in stock shrinkage, and boutiques - stores with an owner and up to two employees - lose up to 7 per cent. That extrapolates to $400 million a year in New South Wales alone, and $1 billion for the whole country.

Stock shrinkage - the difference between the book value of a retailer's stock at selling price and the actual value of stock on hand - is caused by unaccounted for stock through bad invoicing, receiving, despatch and bad recording; theft by staff; and customer theft.

How much does each of these causes contribute to shrinkage? Estimates for Australian department stores range from 30 to 60 per cent for customer theft, 30 to 50 per cent for staff theft and 10 to 20 per cent for poor paperwork (Challinger 1989). The National Retail Merchants Association in the United States rates these causes at a third each, while a large United States department store chain sees poor paperwork as the largest cause at 50 per cent, staff theft next with 35 per cent, and customers trailing at 15 per cent.

Employee theft

One security expert, who heads national security for a jeans chain, says Australian retail staff help themselves to $70 million worth of stock a year - 70 per cent of all shoplifting (Sydney Morning Herald, Good Weekend 16 August 1990). The National Retail Crime Prevention Council put shop theft by staff at $300 million per annum, half the then national estimate.

There are numerous ways for staff to steal from their employers:

• straightforward theft of goods and money;
• under-charging customer accomplices;
• adjusting delivery dockets;
• under-ringing purchases at the cash register;
• fiddling the shrinkage records;
• deliberately damaging goods to buy at staff discount;
• using company time and facilities for personal projects;
• increasing creditors' invoices and keeping the difference;
• replacing perfect items with seconds in the warehouse or store;
• adding a last-minute item to the receipt but not ringing it up;
• picking up receipts for later inclusion in the register as 'voids' or 'refunds';
• palming a forgetful customer's credit card;
• fraudulent refunding; and
• conspiracies of middle management employees.

Some retailers choose to turn a blind eye to much staff theft: they may be unwilling to hound staff because of the effects on morale, it may simply be cheaper to ignore it, or some degree of pilfering may be regarded as a perk to keep otherwise satisfactory employees. Besides, the cost can always be passed on to the customers.

Customer theft

Most customer theft goes unreported. An American study maintained that four out of 10 people had stolen from a shop at some time in their lives (Kallis & Vanier 1985), and in an Australian study, 54 per cent of Tasmanian 15-year-old boys and 44 per cent of girls surveyed admitted stealing from a shop in the previous three years (Warner 1982).

An American study showed that younger males seemed to shoplift more than younger females, but that girls caught up as they got older (Challinger 1989). These findings were supported by a Victorian victim survey, which found the average age of females detected shoplifting was 26.4 years and 19.4 for males.

Professional thieves

While most customer thieves in Australia are amateurs with no market and sometimes no need for the items they steal, there are individual professional thieves and gangs active in shoplifting. They often concentrate on items like cigarettes, which retain their resale value and are easy to turn into cash, and steal to order. The Retail Traders' Association discovered a scam in which thieves were concentrating on stealing large quantities of expensive supermarket items like tins of salmon, which indicates resale rather than personal consumption. And Australian shoplifting gangs are legendary in England.

Robbery and violence

Australia does not have to deal with the terrorist bomb attacks in major stores that happen in London, or with demonstrations against products and the high incidence of convenience store and supermarket robbery that plague the United States. There is no room for complacency, however, as the recent mass shooting at Sydney's Strathfield Mall demonstrates.

With high unemployment and a recessional economy, armed robberies are on the increase. Australian banks have taken this to heart and vastly improved their security, with very promising results (Clarke 1991). The reality is that any organisation with cash on the premises can expect to be hit: post offices are the latest target in Sydney.

Customer aggression has not been addressed in any detail in this volume: for valuable information on dealing with this growing problem, consult Protecting counter and interviewing staff from client aggression by Bruce Swanton and Daryl Webber, published by the Australian Institute of Criminology.

Possible solutions

This manual concentrates on strategies and programs devised in a number of countries to prevent retail theft. Some are simple and inexpensive; others involve sophisticated technology and require huge outlays.

Among the crime prevention strategies examined and, where possible, evaluated are:

• target hardening, for example securing shopping trolleys, electronic surveillance systems and tags and chains;
• crime prevention through environmental design (CPTED) strategies which improve visibility, cut down congestion and route potential offenders away from potential victims;
• more efficient inventory methods:
• the use of computers to track fraudulent transactions;
• the use of the police force to prevent retail crime and the need for cooperation between security staff and police in apprehensions;
• methods of raising the awareness of managers and staff about the problem;
• the effectiveness of prosecution of offenders as a deterrent; and
• what to do in case of armed robbery.

Wide isles and lack of congestion can prevent shop lifting

Finally, the case studies included demonstrate the need to describe the problem properly before proceeding with crime prevention programs, to keep good records, and to evaluate those programs for effectiveness.