The shoplifting threat to the retail industry | FT Transact

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This is what a modern retail security operation looks like, one designed to combat shoplifters right across the UK.

So we've got over 4,000 locations in the country that stream live back to our security operation centres, where we've got specialist personnel who review CCTV, monitor it live to see if offenders are coming in. And they're there to offer that second line of defence to colleagues who are working in the store.

Hi, it's Adam calling from Mitie Security operations centre.

The control centre at this undisclosed location supports numerous retailers throughout the UK and it's never been busier. According to the Office for National Statistics, last year shoplifting rose to its highest level in 20 years in England and Wales, up 30 per cent year on year to March, 2024.

The impact of theft on a retailer can be the difference between that retailer making money at the end of the year and making a loss at the end of the year, and I don't think that can be overstated.

The Association of Convenience Stores says there were 76,000 incidents of violence in shops in 2023, almost double the previous year's figure.

Today, 120 of my colleagues will be verbally abused or threatened, four or five will be attacked, very often with a weapon.

According to the British Retail Consortium, the cost of shoplifting is also increasing at a significant rate.

Cost of loss of customer theft doubled in 2023 versus the previous year, and that cost amounts to £1.8bn.

There's a whole range of factors that underpin any acquisitive crime, including shop theft. And typically they're socioeconomic factors, so that could be anything from addiction or poverty, homelessness, mental health.

It's not just a UK problem. In the United States, for example, the Retail Federation estimated that customer theft accounted for around $45bn in 2022, although that may not signify a dramatic increase in shoplifting there.

Compared to before the pandemic, the statistics that we're looking at is if we take out New York, the rate of shoplifting in the country has come down. But if we include New York, the rate of shoplifting has gone up.

Petty theft has long come with the territory for retailers, but a new trend may be emerging.

Put the items back and leave the store. You have been recorded. The police will be contacted.

What we're seeing increasingly is organised criminal groups that are targeting the retail sector because they've done a cost-benefit analysis, so they see it as simply low risk and very high reward.

The rise of retail crime has been fundamentally driven by those prolific offenders who are stealing to resell, rather than people stealing for themselves.

Stores are fighting back with record spending on anti-theft strategies.

So we estimate that retailers have spent about £1.2bn on the cost of measures to try and prevent such crimes. So this is things like body worn cameras, CCTV, increased security.

Shoppers will also have noticed more goods locked in cabinets or with security tags attached.

When we see things being locked up or there is a lot of surveillance camera, I think it does two things, right? On the positive side, it could give consumers a sense of security and safety. The downside is everybody walking in will may feel that, am I a suspect? Why are they doing this? And of course, there is the inconvenience when things are being locked up. So we're seeing, you know, some positives and a lot of negatives.

A poor customer experience can in turn impact a store's bottom line.

Having to wait for a shop worker to come over, which may only be seconds, can be the difference between a sale or not.

In-store losses from shoplifting can affect customers in other ways. In the US, a 2023 survey found that increased prices was the most common outcome due to incidents of retail theft among small business retailers. Shoplifting still only accounts for a small percentage of overall sales, less than 1 per cent in the US. Despite that, major retailers there including Rite Aid, CVS, and Target, have blamed retail theft as part of the reason for recent store closures, although some critics have suggested it was used as a scapegoat to cover poor corporate performance.

The statistics seem to suggest maybe just used as a reason to close the stores, because we're seeing in cities where the rate has come down, we're still seeing store closing.

In the UK, closures are uncommon but have the potential to increase.

We've begun to hear similar sentiments within England and Wales, where stores are saying they just simply cannot operate safely and profitably, and so potentially would consider permanently closing the shutters and no longer operating.

Thankfully, it's quite rare that retailers on theft alone will have to close their stores. But this is a very serious situation that lots are facing.

It's a risk, but it's not what we're seeing at the moment.

If store closures do occur, the effects can be far reaching.

Now, of course, that impacts the community in multiple ways, not just in terms of access to goods, but also employment. We also know that boarded-up shops are attractors of crime and anti-social behaviour, so they contribute further to that downward spiral in some locations.

It's difficult to ascertain exactly what impact retail theft could ultimately have. Companies aren't required to report incidents, while gathering data is not an exact science and can be difficult to verify.

Some reports also include employee stealing or administrative errors or vendor fraud or damaged goods, and others are a little bit more discerning. And so it's actually unclear how the numbers are being put together.

In fact, a 2023 Council on Criminal Justice Report in the US stated: 'Far better data from law enforcement and the retail industry is needed to help strengthen our grasp of shoplifting trends.' Nonetheless, in the UK at least, the overriding sentiment was that the problem is probably even worse than reported.

So in the 12 months to March, 2024, the police recorded around 440,000 incidents of shop theft. The British Retail Consortium suggests there was around 17mn incidents of shop theft. That would suggest that less than 3 per cent of incidents are actually being reported.

There's a huge gap between what's being reported and what's actually happening.

Wherever the exact statistics stand, at control centres like this one it seems unlikely the war on shoplifting will be dying down anytime soon.