When the mind turns to shoplifting, most people imagine a light-fingered customer stealing merchandise then selling it on the black market or using it for their personal enjoyment.

But in the wold of retail loss, the truth is the initial theft of an item is sometimes just the beginning of the crime.

Return fraud sees these stolen items taken back to the store and then exchanged for either money or a gift card. And it’s a crime that’s a lot more common than people think.

Return fraud

In 2018, the NRF’s Organized Retail Crime (ORC) Survey offered a fascinating insight into return fraud.

They noted ORC cost retailers $777,877 per $1 billion in sales and criminal rings have multiple ways of stealing from retailers.

However, the most prominent type of return fraud involved stealing merchandise and then returning it for a refund.

The report found:

• 3 per cent of retailers had experienced returns of shoplifted/ stolen merchandise

• 6 per cent had encountered employee return fraud and/or collusion with external sources

• 1 per cent had experienced returns of merchandise purchased on fraudulent or stolen tender

• 5 per cent had encountered returns made by ORC groups

• 3 per cent had experienced wardrobing (i.e returns of used, non-defective merchandise)

“In all, survey respondents expect that about 11 per cent of annual sales will be returned and 8.2 per cent of those returns are fraudulent,” the survey authors explained.

Meanwhile, APRISS Retail’s 2018 Consumer Returns in the Retail Industry Report put a dollar amount on the cost, noting retailers incurred an estimated $18.2 billion loss due to fraudulent returns last year.

APRISS also explains the omni-channel environment is further compounding this problem, with more and more consumers opting to buy online and return in-store.

“The increase in buy-online-return-in-store (BORIS) returns is driving new demands—such as offering ‘frictionless’ returns. The ability to offer more flexible and lenient returns, while still mitigating the risk of fraud and abuse, is ever more critical.

Critically, the NRF says 11.2 per cent of all returns will be made without a receipt and that’s where shoplifting and return fraud begin to enter common ground.

Gift cards

Retailers have long been wary of returns without receipts, but in the push to ensure a good customer experience, many are often willing to overlook the lack of a small piece of paper.

In recent times that’s seen retailers offering gift cards, rather than cash, but that too has complications.

“Retailers may attempt to reduce fraudulent returns by providing a gift card or store credit rather than a refund, a popular option when a receipt is not present,” the NRF ORC Survey noted.

“But more and more, those gift cards and credits are sold, often online. This method may slow the thief from getting the cash, but the result is ultimately the same: They end up with the dollars from the stolen and returned merchandise.”

Loss Prevention Magazine explained the appeal of exchanging stolen items for gift cards.

“Rather than fencing the merchandise for 30 per cent of its value on the streets or selling the goods on the second-hand market for 60 to 70 per cent of its value, they can return the merchandise to the store, receive a gift card, and sell the gift card for up to 80 per cent of its market value.

“Factoring in the sales tax portion of the return, which can bring an additional 5 to 10 percent depending on the state, the thief can be looking at an 85 to 90 percent return on their ‘investment’ for the stolen merchandise.”

So, what’s a retailer to do?

Curbing the cost of retail return fraud involving stolen merchandise starts with limiting the potential for shoplifting in the first place.

That involves:

• Protecting merchandise with electronic article surveillance including security labels and security tags

• Monitoring the store using loss prevention professionals and/or CCTV

• Training staff in customer service and the signs of shoplifting

• Good store layout, including adequate lighting to reduce hidden or out of sight areas

• Monitoring potential theft areas like the fitting room

Meanwhile, retailers also need to be clear in their return policy and vigilant when refunding items for gift cards or cash. Importantly staff should also be educated in these policies, and return numbers and instances should be regularly reviewed.

Whether your retail outlet has been targeted by shoplifters or you’re just looking to better understand the playing field, there are a host of facts and figures that indicate just how prevalent retail shrink is in America.

Here’s a quick recap of 10 scary retail shrink statistics in the US…

Loss costs US retailers almost $50 billion annually

The National Retail Federation (NRF) found shoplifting, employee theft, error and fraud cost the industry an astounding $46.8 billion in 2018 alone.

In context, that means shrink sees the industry lose 1.33 per cent in sales.

Most loss is due to shoplifting

In the US, shoplifting and organized retail crime (ORC) are the prime contributors to retail shrink, with the NRF noting 35.7 per cent of loss is due to external theft, outpacing employee theft at 33.2 per cent, administrative error at 18.8 per cent, unknown loss at 6.6 per cent and vendor fraud or error at 5.8 per cent.

External theft has been the primary source of retail loss for the past four years in a row.

The average incident cost has almost doubled

The average cost of a shoplifting incident has almost doubled to $559 since 2015.

Shrink is costing retailers more

In 2018, 20 per cent of NRF survey of respondents reported shrink at 2 per cent of sales or more. That is up from only 17.1 per cent reporting a shrink rate above 2 per cent in 2015.

1 in 11 Americans shoplift

Past figures from the National Association of Shoplifting Prevention indicate one in 11 Americans shoplift. In cold hard numbers, that means 27 million Americans are shoplifters, while 10 million have been caught in the act at some point in the past five years.

There are three types of shoplifters

Researchers commonly break shoplifters down into three distinct categories:

• The professional – This shoplifter steals for economic gain as part of a group or individually.

• The amateur – This shoplifter steals for the “rush”, at the behest of friends or out of simple necessity.

• The opportunist – This type of shoplifter rarely enters a retail environment intending to steal, but rather takes items because security is lacking, or the opportunity is available.

A repeat offence

A FaceFirst study found 60 per cent of known shoplifters enter at least two separate locations of the same retail chain, while 20 per cent visit three or more locations.

Shoplifters steal for a variety of reasons

Shoplifters steal for both rational and non-rational reasons, with researchers noting they usually steal due to one of five factors:

• Socio-economic disadvantage

• To fund drug use/addiction

• Thrill seeking

• Kleptomania

• Absent mindedness

Footwear is a frequent target

Looking across the verticals at what thieves are most likely to target, the most recent Global Retail Theft Barometer indicates the most commonly shoplifted items in America are:

• The apparel sector – footwear

• In DIY/home improvement – power tools

• In electronics – mobile devices and accessories

• In food and beverages – wine and liquor

• In health and beauty – fragrances and perfumes

When people shoplift

In the US winter is prime shoplifting season, along with sales periods. Much of that theft is driven by the festive season, with 81 per cent of winter losses occurring during holidays/festivities.

This shrinkage is prompted by increased foot traffic throughout stores, making it harder to track and detect theft, and is then further complicated by casual employees, who often have less training in store protocols and shoplifting detection.

Looking to combat theft?

You can learn more about the tools and strategies to combat shoplifting here, or speak with our friendly staff about implementing effective EAS solutions like security tags and labels.

When talk turns to Electronic Article Surveillance, the focus is often on its role in reducing theft. But in the competitive world of real-world retail, the benefits of EAS extend far beyond deterring and detecting shoplifting.

EAS can also improve the customer experience, general store safety and staff productivity. So, here’s an insight into six hidden benefits of EAS.

The customer experience

In the modern retail environment, the “customer experience” allows bricks and mortar retailers to play to their strengths. A positive customer experience sees consumers touching, feeling and interacting with products as part of their purchasing journey.

EAS helps facilitate this experience by allowing retailers to securely showcase their wares in an open and welcoming environment without the fear of theft.

Due to the discreet, unobtrusive nature of security tags and labels, customers can freely interact with merchandise, while the store associate can concentrate on selling rather than standing guard against shoplifting.

Open display of stock

When it comes to shoplifting, high-value products that are easily re-sold are some of the most commonly targeted items.

Traditionally retailers protected these products by keeping them secured in lockable cabinets or displays. While this method was effective, it’s not exactly welcoming and also costs the retailer time and effort.

Instead, EAS allows the open display of items, providing easy access and an attractive experience, in the knowledge each item is protected by tags or labels at a product level.

Staff productivity

The beauty of EAS is that it alerts staff to a potential theft by sounding an alarm. This allows retailers to get on with the job of selling and serving their consumers, rather than constantly monitoring stock or analyzing surveillance footage.

EAS also cuts down on time wasted opening and closing lockable cabinets or displays.

Fewer out of stocks

When items randomly go missing due to theft, retailers lose their ability to keep track of stock. Ultimately this can result in products being out of stock, which again affects the experience of the customer and the productivity of staff.

EAS helps reduce out of stock events by ensuring the product is available.

Improved store safety

Unobtrusive and effective, EAS helps benefit the store environment as a whole. It works to deter shoplifters from targeting a retail outlet, but also helps catch them in the act should they run the risk of attempting a theft.

This improves the safety of the retail outlet as a whole for both staff and customers.

Easy to operate

Once an EAS system has been installed and activated, it is simple for staff to use. The antennas run 24/7 and require very little maintenance.

Staff simply affix active security tags or labels to a product, which then communicate with an antenna. These tags and labels are quickly and easily detached or deactivated at the Point of Sale as part of the sales transaction.

Tags can be reused, while deactivated labels are disposable and pass through the security antenna without sounding an alarm.

The final word

EAS is renowned by retailers across the globe as one of the most effective methods of preventing theft, with statistics indicating it can reduce stock loss by up to 80 per cent.

In the interim, it also reduces the burden on staff when it comes to detecting theft, helps create a safer more welcoming environment and allows consumers to freely interact with merchandise, affording them an improved customer experience.

You can learn more about selecting the right EAS system for your retail outlet here.

The amateur – This shoplifter steals for the “rush”, at the behest of friends or out of simple necessity. It’s not about economic gain, but about social status or even survival, and often includes teenagers who steal as a rite of passage.

In fact, according to the National Association for Shoplifting Prevention (NASP), around a quarter of all American shoplifters are teens, and chances are they’re stealing on a dare or out of boredom.

Right now, America is in the grip of shoplifting season, with statistics indicating winter is the prime time for theft across the retail sector.

That’s partly due to the festive season, but also because of a whole host of other factors that create the perfect storm when it comes to retail loss.

So, let’s take a deep dive into when people shoplift and the strategies you can employ to mitigate the loss.

‘Tis the season of thieving

According to the latest Global Retail Theft Barometer,  shoplifting is indeed a seasonal activity, with winter presenting some of the greatest challenges and losses for retailers in the US.

Much of that theft is driven by the festive season, with 81 per cent of winter losses occurring during holidays/festivities.

This shrinkage is prompted by increased foot traffic throughout stores, making it harder to track and detect theft, and is then further complicated by casual employees, who often have less training in store protocols and shoplifting detection.

Meanwhile, the consumer’s need to “have items” for the season of giving may lower their inhibitions about committing a theft.

“Rise in theft during holidays/festivals is driven by shoppers’ pressures to buy, seasonal hiring, crowded and chaotic stores, and increased perceptions about easy opportunities to get away with theft,” the Theft Barometer notes.

But make no mistake, even after the crowds of Christmas subside and the footfall of sales traffic subdues, retail loss continues at a higher rate throughout the winter months.

And, according to the Global Retail Theft Barometer that comes down to an often-overlooked cause – the clothing people wear. They note that theft in winter increases quite simply because of the heavy and bulky clothing people wear, which makes it easier to conceal stolen merchandise.

Five finger discounts at sales time

Although winter is a standout season for increased theft there are other peak times of the year, usually coinciding with sales periods.

Again, the upward trend in loss during these times is attributed to increased foot traffic, more frenzied shopper behavior, and the perception that theft is easier to get away with.

However, it’s also likely stock positioning and store layout contributes to the rise in losses.

Sales often see more stock on the floor, and this results in more items being available to shoplifters. Not only is there more opportunity, but due to crowded aisles and stacked sales tables, store associates are more likely to struggle to see thefts occurring, partly due to the fact they are busy and partly because additional stock on the floor reduces visibility.

So what can you do?

Reducing spikes in theft

Loss prevention is always multi-faceted strategy that includes harnessing available technology, while also focusing on staff recruitment and training. Periods which are renowned for additional losses should see extra vigilance across the board.

Staff training

Even though holidays and sales periods may see an influx of seasonal workers, all should be screened carefully prior to commencing employment.

New recruits should also be given thorough training in store protocols and customer service techniques. It has been widely reported that the simple act of greeting customers can result in a reduction in theft.

All staff should be given aa refresher of the suspicious behavior that shoplifters are likely to portray, which includes:

• Spending more time watching the cashier or salesperson than actually shopping.
• Wearing bulky, heavy clothing during warm weather or coats when unnecessary.
• Walking with short or unnatural steps, which may indicate that they are concealing stolen items.
• Taking several items into a dressing room and only leaving with one item or none.
• The customer’s eyes are not looking at what their hands are doing; instead they are looking out for staff! So if the eyes don’t match the action…beware.
• Appearing nervous and picking up random items with no interest.
• Frequently entering store and never making a purchase.

Electronic article surveillance

Electronic article surveillance, comprising security tags, security labels, and detection antenna, remains one of the most widely used and effective means to detect an incidence of theft as it is occurring.

Noted to reduce shoplifting by an estimated 60-80 per cent, the strategy sees tags or labels affixed to merchandise. Tagged or labelled products are constantly monitored by the antenna, and should a shoplifter attempt to leave a store with an item, an alarm will sound, alerting staff to a potential theft.

Tags or labels on merchandise also often act as a visual deterrent for thieves.

Store layout

Even during busy periods like sales and holidays, store management should use common sense in terms of store layout.

Good lighting plays a role in reducing theft, as does clear visibility of the store and stock. Change rooms should be carefully monitored and/or fitted with technology like the fittingroom guard.

Meanwhile, management may wish to reconsider the volume of high value stock they have on the floor, instead opting for a tethered display item, with further stock stored in lockable cabinets or on display racks with stop locks.

Retailers should also resist the urge to locate sales tables too close to the entry where items may be more prone to the snatch technique, which sees shoplifters simply grab an item and run (regardless of whether an alarm sounds).

Security personnel and CCTV

Technology, staff training and good store layout might be the first lines of defense, but monitoring also has an important role in loss prevention.

Sales periods and holidays are an ideal time to boost your in-store security presence, while CCTV is a simple and cost-effective way of recording and identifying shoplifting crimes.

You can learn more about security tags and label technology here, or gain an insight into shoplifting behaviour here.