Retail theft is a significant problem in the United States that has a substantial impact on retailers, consumers, and society as a whole. Shoplifting is the most common cause of retail shrinkage in the U.S., accounting for 37% of total losses in 2021. Retailers cited external theft, including organized retail crime, followed by employee internal theft and inventory process failures.
According to the National Retail Federation (NRF), retailers lose billions of dollars yearly due to shoplifting, with the latest crime figures showing losses of over $94 billion annually.
Shoplifting is not only a problem for large retailers but also for small businesses. Smaller stores are often hit the hardest by retail theft, as many don’t have the technical know-how to implement cost-effective security measures or absorb the losses caused by theft. According to a survey by the National Federation of Independent Business, 29% of small business owners reported that they had experienced shoplifting in their stores.
The impact of retail theft goes beyond the financial losses suffered by retailers. It also affects consumers, as retailers often pass on the theft cost to their customers through higher prices. Worst still is the potential for violence, as shoplifters may become aggressive when confronted by store employees or security personnel. This can put employees and other customers at risk of harm.
Additionally, there continues to be a sharp increase in shoplifters being part of organized retail crime rings that engage in other illegal activities, such as drug trafficking or human trafficking.
These criminals are more likely to target CRAVED items than others. CRAVED is an acronym that refers to items that are: (1) concealable; (2) removable; (3) available; (4) valuable; (5) enjoyable; and (6) disposable. Items that have more of these characteristics are more likely to be stolen.
Top categories include apparel, health and beauty, electronic appliances, accessories, food and beverage, footwear, home furnishings and housewares, home improvement, eyewear, office supplies, infant care, and toys. There is a high demand for this type of stolen merchandise. Thieves can also more easily sell stolen goods on the black market or online, often for a significant profit, creating a strong incentive to steal.
Several factors continued to contribute to retail theft. One of the primary factors is the ease with which thieves can steal from shops. Many stores lack security measures, including poorly designed or dated surveillance and non-intervention policies in place to protect the safety of personnel, making it easier for thieves to walk out with merchandise.
Another contributing factor is that retailers have open displays that make it easy for customers to grab items and walk out without paying. Additionally, self-checkout systems can be vulnerable to exploitation, as customers can quickly scan items incorrectly, switch out barcodes for less expensive items, or not scan goods at all. Sweethearting also continues to be a concern at the point of sale, involving an employee and someone they treat favorably. New omnichannel sales models increase risks such as curbside pickup and e-commerce returns.
And the impact of retail theft goes beyond financial losses. It can also psychologically impact store employees and owners, who may feel violated or unsafe after experiencing theft, putting further pressure on staff attrition, retention and hiring.
One effective solution to reduce shrinkage is the use of intelligent-based video surveillance.
Video surveillance has long served retail as a deterrent and to provide evidence in the event of theft or other incidents, and while no one size fits all, here are some quick tips for ensuring their effectiveness.
1. Place cameras strategically: It's important to mount place cameras in areas where theft is most likely to occur, such as near high-value items or areas with low visibility. This will help capture footage of any suspicious activity and deter potential thieves.
2. Use high-quality cameras: Investing in high-quality cameras that come with true WDR and IR will ensure that footage is clear and easy to analyze in a range of in-store lighting conditions that range from bright sunlight from entrances and display windows, dappled light caused by aesthetic lighting, promotional signage, and aisles, to darker areas such as fitting rooms and stock areas. High-performance image capture will also help identify suspects and provide evidence in the event of an incident.
3. Monitor footage regularly: If stores don’t have the scale or budget for centralized real-time monitoring, staff must view live and recorded footage regularly to identify any suspicious activity. This can be done by assigning a dedicated staff member to monitor footage or using video management software to alert staff to any unusual activity by pre-configuring alerts and alarms and relaying video popups.
4. Train staff on how to use the system: Store staff should be trained to use the video surveillance system, particularly how to access and export footage and report suspicious activity to loss prevention teams. This will ensure that the system is used effectively and that staff can respond quickly to incidents.
5. Use deep learning analytics: AI-powered analytics no longer needs to be expensive, and they can help identify patterns of behavior that may indicate theft or other suspicious activity. For example, the software may detect when an item is repeatedly moved from its original location or when a customer spends an unusual amount of time in a particular area. AI-powered analytics can also help retailers identify patterns of theft and fraud, which can inform their loss-prevention strategies. Useful tools include object, intrusion, loitering and face detection, heat mapping, line crossing,
6. Use spot monitors and signage: Posting signs indicating that the store is under video surveillance can serve as a deterrent and remind customers that their actions are being monitored. For settings where more obtrusive security measures are unlikely to detract from the shopping experience, such as grocery, DIY, and discount stores, spot monitors ensure customers that staff can see their activity being recorded as they move around the store. These, too, can be placed in storerooms and loading bays to deter internal theft and fraud.
7. Balance surveillance with privacy: However, retailers need to balance the benefits of video surveillance with customer privacy concerns. Retailers should clearly communicate their use of surveillance cameras to customers and ensure that cameras are not installed in areas where customers have a reasonable expectation of privacy, such as fitting rooms.
Video surveillance is a valuable tool for retailers tackling shrinkage and improving store operations. By using cameras strategically and responsibly and adopting the latest video analytics, retailers can create a safer and more efficient shopping experience for customers and employees.
For more detailed best practices, download our latest eBook that supports retailers and their systems integrator design and implement video solutions to reduce shrinkage and protect profits with just one click here.