If you walk into a mega store like Wal-Mart, you will probably find everything you need out there and you might even feel that these guys really get to make huge profits. The truth is far from that because there is a dark side to it. There have been instances where shoppers have actually loaded their carts with all types of merchandise and walked out of the store without making a payment. Although Wal-Mart earned $348.6 billion in sales last year but it also suffered theft amounting to $3 billion.
The truth is that several mega stores as well as small stores are suffering from the onslaught of a new breed of shop lifters categorized as the five finger discount shopper. The five finger discount shopper is actually not interested in shopping at all; he or she is interested in getting them for free. Anything that is left without a lock and key like Tees, mugs, glass wares, clocks etc can be stolen. Shoplifting doesn’t just have a negative impact on the effective sales in a retail store but also on the honest customers who have to bear the brunt.
According to a research, five finger discount specialists have shoplifted as much as $10 billion worth of goods from different retail stores all across the United States each year. To counter the loss, the retailers have been left with no other choice than to increase the price of merchandise, which primarily hits the honest consumer more than anyone else.
Researchers and analysts have found to their surprise that most of the shoplifters steal out of need, some do it to sell the same merchandise for making quick money and then there are those who do it out of an impulsive reaction like the one by a top celebrity like Winona Ryder. When celebs start to shoplift it can be anyone’s guess that retailers will not have much to fall back upon. A shoplifter doesn’t really have a perfect profile and hence it is more difficult to determine if the customer walking into the store is a genuine buyer or a fake one.
Inventory shrinkage has hit retailers really hard. Inventory shrinkage consists of mainly shoplifting, employee theft, vendor fraud and to an extent administrative error. The total US inventory shrinkage costs in 2007 was to the tune of $31 billion and this data was released in the National Retail Security Survey report underlying the various causes of retail theft.
In a report made by criminologist Richard C. Hollinger, in the past one year, retailers have lost almost 1.7% of their gross annual sales due to inventory shrinkage. The survey took into account only that part of the retail economy, which showed transactions worth over $1.845 trillion dollars on an annual basis. So at the end of the day, the retail loss was approx. $31.3 billion. As of today, inventory shrinkage due to shoplifting and employee theft is the largest category in the US for of larceny and is said to be bigger than bank robberies and car theft.
Some Inventory Shrinkage Statistics – 2002
Employee Theft 48.5% $15.1 Billion
Inventory Shrinkage Sources %Loss Loss in Dollars ($)
Shoplifting 31.7% $9.7 Billion
Administrative Error 15.3% $4.8 Billion
Vendor Fraud 5.4% $1.7 Billion
Total $31.3 Billion
Source: National Retail Security Survey, November 2002
According to a study related to inventory shrinkage, it was revealed that the security managers in retail were responsible for almost 48.5% of losses with employee theft costing the industry a gross loss of $15 billion. According to some of the other researches and market analysis reports, it has been revealed that shoplifting has increased retail losses by 31.7% last year as compared to 30.6% a few years back. Last year, the total or gross loss suffered by the retail industry due to shoplifting was around $10 billion.
Global Retail Theft Statistics
Let us take a quick look at the statistics worldwide where retail inventory shrinkage is concerned according to the Global Retail Theft Barometer Report 2007:
· The total global shrinkage in terms of stock loss due to shoplifting, vendor fraud and employee theft cost $ 98,630 million in losses. The rate of inventory shrinkage has actually increased across the world from 1.34% to 1.36%.
· Shoplifting is responsible for almost 42.0% of inventory shrinkage or $41,504 million in losses across the world.
· A study conducted in 32 countries revealed that employee theft has cost retailers 35.2% of inventory shrinkage, which led to a loss of $34,671 million. Administrative errors came second with 16.5% and reported a total loss of $16,248 million while vendor theft was third with 6.3% or $6,207 million in losses.
· The loss prevention costs globally was approx $25,590 million (£12,890 million), which is around 0.35% of the total retail sales.
Conducted by Bamfield, J. (2007) Global Retail Theft Barometer, Nottingham: Centre for Retail Research
Loss Prevention and Inventory Shrinkage
This is probably the toughest thing to do because it is extremely difficult to monitor every activity in the retail store. The use of store security cameras have become more wide spread over the past few years, allowing a much smaller security force to cover areas of a store that would otherwise be unmonitorable.
With emerging technologies, there are different options that retailers have for loss prevention and to minimize the rate of inventory shrinkage. Some of the options are:
· Tag programs: In these programs, retailers can place a small anti-theft label inside the box that contains the product or within the product package. If someone tries to steal the product or doesn’t pay for it then it will raise an alarm notifying the authorities that someone is trying to shoplift. This can considerably reduce shoplifting as well as employee theft.
· Data mining packages: Data mining solutions have the ability to detect a potential theft problem and it can then alert the concerned personnel and this takes place in real-time. The data mining solutions can also be connected to CCTV’s, digital video recorders, spy cameras and hidden cameras that will provide clear images.
· Hidden Camera: The hidden camera is probably the most effective solution towards loss prevention and decreasing the alarming rate of inventory shrinkage. The hidden cameras can actually be installed just about anywhere within the premises of the retail store and will monitor activity of the consumer as well as the employees. It is effective because it will catch the shoplifter off-guard and since no one can see the camera, shoplifters will avoid stealing from the store and employees will be cautious.
Benefits of Hidden Cameras
There are several underlying benefits of the hidden camera and it can help in loss prevention to a great degree as compared to some of the other options. This is because a hidden camera can’t be seen and until and unless a retailer discloses the fact, there is no way of knowing if shoppers and employees are being monitored or not. Above all, a retailer can actually see a shoplifting taking place and catch the culprit red handed. Here are some of the benefits:
· Employee Theft: Hidden cameras can reduce or prevent employee theft to a great degree. It can be embarrassing for any employee to be caught on camera while stealing and this will set example for others. Once an employee is caught, all other employees will become cautious. Since the employees handle a lot of money hence they might be tempted to steal some. Having a hidden camera will prevent that because they will know that someone is always watching.
· Shoplifting: Shoplifting is one of the biggest issues that retail chains face today. It is a significant and concerning problem and demands attention because it has a $10 billion tag on it. Installing hidden cameras will mean that a retail store can have video surveillance of the entire store without the shoplifters having any clue about they being watched.
· Vendor Fraud: There are times when the vendors selling the products to the retailers indulge in fraudulent activities. Normally such activities will take place behind your back and you won’t be able to point a finger at them because you don’t have the proof. With hidden cameras, this issue will be taken care of as you will have complete proof of any vendor fraud.
· Employee Training: Hidden cameras can be used in a positive manner and seen as a tool for monitoring employee behavior. There are times when employees behave rudely with customers. This may mean loss of the existing customer and many potential customers, which will translate into losses. With the help of the hidden camera, retailers can identify specific or negative employee behavior and then provide necessary training to those employees.
The most important aspects of the retail business are loyal customers and profit. If you are incurring a loss due to vendor fraud, shop-lifting and employee theft then it will also have its impact on existing customers who might choose not to shop at your retail store. It is better to be safe than be sorry! A hidden camera will do exactly that – make your retail store safe and prevent any further losses.
Additional information on store and home video security systems can be found at Hidden Cameras Headquarters.