It's the kind of shopping spree that makes retailers flinch and it's costing Canadian merchants more than $1 billion annually.
Shoplifters - both amateur and professional thieves with organized retail crime rings - are expected to be out in force this holiday season, turning them into the Grinches likely to steal the Christmas profits as well as the merchandise.
"Canadian retailers lose more than $3 billion a year or $8 million a day, and that is a result of store theft only," says Rita Estwick, director of loss prevention for the Toronto-based Retail Council of Canada (RCC) and co-chair of its Retail Organized Crime Task Force.
While Estwick's numbers include both customer and employee theft, she says retail organized crime - professionals who work for criminal organizations under a well-planned set of procedures and structure - is definitely a problem.
"Booster rings - groups of individuals who go into retail stores and steal product en masse - they don't steal one pair of jeans, they steal racks," says Estwick. "They'll use a booster bag and line the inside of it with foil to defeat store security systems."
Winnipeg police busted part of an alleged retail organized crime ring in mid-November, arresting four people and claiming they'd put a dent into a ring operating in five provinces.
"Our investigation has revealed that this particular group has committed distraction thefts from Ontario through to B.C.," says Sgt. Larry Levasseur, head of the Winnipeg Police Service's commercial crime unit. "This group has been active for the past two years."
Police believe the alleged ring includes eight to 10 shoplifters, who could easily steal $100,000 in merchandise in one day.
"The four people that we arrested are all from B.C.," said Levasseur. "They flew to Winnipeg for the sole purpose of stealing as much popular and high-end merchandise that they could get their hands on."
Police allege the group went to several Wal-Mart stores and made off with 21 laptop computers and several dozen iPods. The suspects were also apprehended with digital cameras.
Many of the items in the stores were kept in locked cabinets or display cases, but Winnipeg police say the suspects possessed keys.
In some instances, says Levasseur, the retailers had no idea that they had been robbed until police contacted them.
To combat such crime, Levasseur recommends that chainstores avoid having single keys that open display cases in multiple stores. "This makes it very easy for these thieves to be successful," he says.
According to the initial edition of the Global Retail Theft Barometer, the first attempt to put a pricetag on retail theft across the globe, shoplifting drains $1.28 billion from the Canadian retail sector each year.
The study, funded by an independent grant from New Jersey-based Checkpoint Systems Inc., covers 32 countries around the world, including 25 countries in Western and Central Europe, as well as Canada, the U.S., Australia, India, Japan, Singapore and Thailand.
Eight hundred and twenty retail companies, operating 138,603 stores with sales of US$948 billion, provided data.
The report says the largest source of retail shrinkage - the money lost from damaged or stolen goods, administrative errors or vendor fraud - was customer theft, otherwise known as shoplifting. It puts a value of US$41.5 billion on those losses and notes that shoplifting is responsible for 42 per cent of all inventory shrinkage losses worldwide.
However, both Canada and the U.S. bucked the worldwide trend, with shoplifting taking a backseat to employee theft. The total cost of crimes committed by dishonest employees in Canada totalled $1.5 billion.
The Centre for Retail Research (CRR), based in the United Kingdom, says many U.K. retailers can expect to see the amount stolen in the four weeks before Christmas rise by approximately 3.4 times more than what would be stolen in a normal four-week period. The CRR believes the situation will be similar in Canada.
"I don't think there is any evidence that Canadian employees are more dishonest than those in Europe," said CRR director Joshua Bamfield in an e-mail.
"I think that Canadian, U.S. (and also U.K.) retailers are more likely to employ part-time or temporary staff, who may feel little loyalty to the business. Canadian retailers have been using security systems and security employees to drive down shoplifting and they have been successful and this will naturally 'increase' the proportion of employee theft."
Bamfield agrees organized retail crime, which includes professional shoplifting rings, is also on the rise.
"The impact of organized retail crime in the U.S. has really increased the average amount stolen (US$693 in the U.S. compared with US$241 in Canada, and US$270 globally)," he says. "I know this is an increasing problem in Canada (Europe, too) where large-scale crime and crime groups see retailing as a soft target - and because the penalties for retail theft are relatively low, it is much less risky to steal from a retail food supermarket than a gas station."
The Global Theft Barometer did not try to quantify differences between countries and provide a picture for each.
Previous CRR research into the patterns of shoplifting shows that some people steal because they are poor or destitute. However, Bamfield says this is a small percentage of the problem.
"There is a lot of juvenile shoplifting, but mainly it is the theft of branded goods for resale and only a minority cause is people stealing for themselves," he says. "Shoplifting reflects consumer trends: If no one wants to buy a product no one wants to steal it either."
Once the figures are added up, shoplifting, employee theft, vendor and supplier fraud along with supply chain problems - in addition to $974 million spent on loss prevention security to curb crime - costs every Canadian household $322 per year, the CRR report says.
"These costs are not deductions against the profits of some anonymous capitalist monster, but actually have to be met by higher prices in stores, the wages of employees and the dividends of stockholders," says Bamfield. "So this is a problem for us all, not only the retailers themselves."
Minimizing Criminal Exposure
Canada’s Retail Organized Crime Task Force, a joint operation of the Retail Council of Canada and Canada Post Corp., has developed numerous ‘best practice’ documents for retailers in order to minimize their exposure to criminal activity.
Here are some of their tips that retailers can use to stop crime in its tracks:
* Organized theft rings will use a number of methods to steal
merchandise, including distractions, hanging around unauthorized exits, etc. Special attention should be given to these types of
behaviours, as well as other areas including restrooms and fitting rooms.
* Criminals hate attention. Providing exceptional customer
service to all consumers will likely minimize your losses.
* There are no simple solutions to eliminating the risk of cargo/stock theft. However, there are a number of preventive measures that can be implemented to minimize the risks including personnel, physical and procedural security processes.
* Gift card fraud is an increasing problem for the Canadian
retailer. Maintaining gift card inventory control as with any
product is a good tip to minimize the exposures.
Source: Canada’s Retail Organized
Crime Task Force
(Laura Severs can be reached at laura@businessedge.ca)
