How Does Shoplifting Affect Retail Stores?

Shoplifter

Shoplifting is one of the biggest challenges facing retailers. It isn't new. Shoplifting is also a crime that many people see as harmless, especially in children. According to the National Association for Shoplifting Prevention, 89 percent of children admit to knowing someone who shoplifts, and 66 percent of those still socialize with the shoplifter. In fact, this seemingly harmless crime causes major problems for both retailers and their customers.

Increased Product Costs

Each year, when retail stores perform inventory, they come away with a number that represents the amount of product that was lost, damaged or stolen since the last inventory. This number is called shrinkage, and it costs American retailers $40 billion in 2007, according to a study by Retail Systems Research. Usually, stolen items make up a large part of the shrinkage number. To make up this lost cost, prices are raised on the items most affected, especially, but everything may see an increase.

Increased Payroll Costs

To keep shrinkage numbers down, retailers hire or outsource for security. Often called "loss prevention," this team works to eliminate shoplifting in stores. Surveillance equipment is also acquired to watch the merchandise when the loss prevention officers cannot. Large retailers like Wal-Mart maintain a team of uniformed and plainclothes loss prevention officers to watch for shoplifters. These additional costs also affect item prices, increasing them.

Increased Retail Prices

The increased shrinkage and personnel as a result of shoplifters forces retailers to raise price prices in an effort to recoup the profits lost on the missing products. In recession economies, shoplifting tends to increase. Coupled with the retailer's already dwindling profits from lagging sales, shoplifting can devastate a business, causing it to raise prices just to break even. In this way, everyone suffers, including the shoplifters, who usually buy things as well as shoplift on shopping trips.

Stores usually do not disclose their markup prices, so it is unclear how much of a markup that shoplifting causes. However, the price increases are always evident. However, shoplifting isn't always the sole reason for price increases. It is just very influential.