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In Part 1 of this series, we presented the latest crime statistics including the pandemic impact and the recent trends on increased violence.
In this final Part 2, we profile the criminals and their preferences. We explore retail crime scenarios with inflation and a potential recession. Finally, we summarize my thoughts (and yours) on whether retail crime is out of control and what we can do about it. The introductory picture is a big hint on the key answers.
Here are some interesting statistics profiling retail criminals from the National Association for Shoplifting Prevention:
Additionally from QuerySprout:
In the latest Hayes International theft study, the researchers analyzed 19,000 randomly selected Applicant Review questionnaires (pre-employment ‘honesty tests”) that were given to retail job applicants. Of all those applicants, just over 19 percent were rated as ‘high risk’ due to their admissions of previous wrongdoings and attitudes towards honest and dishonest behaviors. Interesting their responses to some of the questions:
Based on analysis completed by Hayes International, the average ‘high risk’ job applicant was responsible for the theft of $692, compared to $59 for the average ‘low risk’ applicant. This equates to nearly 12X the loss.
What do retail thieves crave the most?
This particular list is from 2020, but would be interested in hearing from retailers what has changed in 2021 as we fully emerge out of the pandemic.
As we are in a period of high inflation with the potential of a recession ahead, let’s summarize some historical statistics from similar economic stages in history.
Above chart appeared in a Bloomberg 2022 article titled ‘Shoplifting is Scaring Retailers. Wall Street Should Worry, too’. As they summarized, “The last time consumers were under severe strain — in the wake of the 2007 financial crisis, amid rampant job losses and spikes in prices for food and fuel — shoplifting surged.”
Analysis from Western Europe research by Joshua Bamfield found that shrink decreased from 1.45 percent of sales in 2002 to 1.23 percent in 2006. But it rose quickly in 2007 during the ‘great recession’ onwards, reaching 1.39 percent of sales in by 2011.
Go back into history further and similar trends emerge. “In the 1970s, when inflation and unemployment took hold at the same time—the era of “stagflation”—crime rates rose. Inflation, not general economic hardship, appeared to be the culprit behind rising crime.”
Post 9/11, retail theft skyrocketed by 16 percent and by 30% during the 2008 recession. Multiple other research papers point to the same conclusion. Inflation and hard economic times increase crime in general and this includes retail theft.
The first recorded event of someone stealing in a retail store occurred in London during the 16th century. Would venture to say that stealing in retail was probably happening even before this date.
In 2001, a massive study of 40,093 Americans, “found that 10 percent had a "lifetime prevalence" for shoplifting and 11 percent had done it. Ten percent is higher than the percentage of American teenagers who have tried cocaine or used methamphetamines.”
Retail losses from theft are costly on multiple levels. For every $330 worth of products stolen, a retailer needs to sell an incremental $300,000 worth to break even. “For every $1 recovered, $11.67 is lost to retail theft, meaning that only 7.9% of total theft losses ever result in a recovery.”
The pandemic was not kind to retail crime. In a Wall Street Journal article, a CVS spokesman indicated that the company’s drug stores experienced a 300% increase in theft, since the pandemic start.
The increase in Organized Retail Crime compounds the problems for retail and society. Today, ORC “is leading to more brazen and more violent attacks in retail stores throughout the country. Many of the criminal rings orchestrating these thefts are also involved in other serious criminal activity such as human trafficking, narcotics trafficking, weapon trafficking, and more. Tackling this growing threat is important to the safety of store employees, customers, and communities across the country.”
Retail crime threats are real, more visible, and are getting more violent. Next generation loss prevention technology solutions need to step up their pace in challenging this growing retail problem.
Improved legal boundaries need to be established around controversial solutions such as face recognition. The Internet is breaking down borders where stolen goods can be sold. Over six in 10 retailers believe and I agree that a federal ORC law is required to address the challenges with the professional thieves.
A July 2022 Time Magazine headline – ‘U.S. Crime Is Still Dramatically Higher than Before the Pandemic’ – was a reminder that police departments are overwhelmed. Supported by technology, strong partnerships are required between retailers, law enforcement, industry groups, solution providers, and the federal government to address the ever-changing threats. Increased loss prevention education is also part of the success mix.
Based on the data presented in this two-part series and your own experience, what do you think? Is retail crime out of control and what are the potential solutions?
If you missed it, check out Part 1 of this series.
Late last year sensational ‘flash rob’ pre-holiday events elevated concerns with retail crime. “On Black Friday alone, a crew of eight made off with $400 worth of sledgehammers, crowbars and hammers from a Home Depot in Lakewood, Calif.; a group ransacked a Bottega Veneta boutique in Los Angeles; and roughly 30 people swarmed a Best Buy near Minneapolis, grabbing electronics.”
In the era of social media, these events and more led to riveting television coverage (NBC Bay Area).
It’s not too early during this summer to think about the upcoming holiday season. This is part one of a two-part series on retail crime trends. What has been the impact of the pandemic? How are violence patterns evolving? What are the profiles of the crime wave? How will inflation and a potential recession impact retail crime? If retail crime is out of control, what do we do about it?
As this rockin' picture reminded me, the retail industry, even with its current negative challenging forces, remains very vibrant. 2021 confirmed that we are all resilient consumers who will continue to shop our favorite brands. In May 2021, E-marketer forecasted that retail sales globally would rise 6% to just over $25 trillion, which was a significant comeback from 2020. By the end of year, 2021 global retail sales actually grew 9.7% reaching total spending of just over $26 trillion.
2021 in-store sales grew a healthy 8.2% globally to just over $21 trillion which was more than was spent in 2019. “Pent-up demand from in-person shoppers accelerated the recovery by two full years.”
When this E-marketer research was published in January 2022, brick-and-mortar sales were projected to grow 2.6% to 3.4% for the remainder of the forecast out to 2025. More spending is expected in physical retail than ecommerce in 2022 ($702 billion versus $604 billion), despite its slower growth rate.
This article and this picture from a recent NRF trade event in Cleveland (Home of the Rock & Roll Hall of Fame) are a reminder that retail does indeed rock. It includes some of my favorite statistics on the industry and some projections on where we go from here.
For quite some time, I have been predicting that the future of retail will be driven by stronger branding and increased digitally influenced immersive customer experiences. COVID-19 became a major accelerator of digital transformation trends with technology often becoming the differentiator to changes in consumer loyalty.
“The pandemic ushered in an unprecedented level of channel switching and brand loyalty disruption. A whopping 75 percent of consumers tried new shopping behaviors, with many of them citing convenience and value. Fully 39 percent of them, mainly Gen Z and millennials, deserted trusted brands for new ones. That restlessness is reflected in the fact that many younger consumers say that they are still searching for brands that reflect their values.”
This article summarizes the continued importance of branding focusing on the 2022 leaders as researched in one of my favorite annual reports from Brand Directory / Brand Finance.
Our physical retail and digital innovation exploration journey so far:
Part 1 - We explored the humble beginnings of department stores, supermarkets, and the first use of a bar code in a physical store; Part 2 - We expanded our innovation journey to ecommerce, smartphones, and robots; Part 3 -We shifted to loss prevention technologies: cash registers, CCTV cameras, and Electronic Article Surveillance; Part 4 - Fast rising RFID, Self-checkouts, and the Internet of Things (IoT) made an appearance.
In this Part 5, we geo-locate ourselves with GPS, go wireless with Wi-Fi, and become influencers on Social Media.
The Global Positioning System (GPS), as you might have guessed, has their origin in space, the final frontier. In 1957, Russia launched Sputnik, the first successful space satellite. Scientists at the Applied Physics Laboratory (APL) at John Hopkins University observing the strange radio signals discovered what became known as the Doppler Effect.
In Part 1 of this series, we explored the humble beginnings of department stores, supermarkets, and the first use of a bar code in a physical store. In Part 2, we expanded our innovation journey to ecommerce, smartphones, and robots. In Part 3, we shifted to loss prevention technologies some of which have become powerful workhorses in store operations: cash registers, CCTV cameras, and Electronic Article Surveillance (EAS).
In this Part 4, we provide some definite answers on the start and adoption rates of RFID, we seek more contactless answers with self-checkout, and we travel on the Internet and discover more things.
The consensus is that the roots of radio frequency identification can be traced back to World War 2. “The Germans, Japanese, Americans and British were all using radar—which had been discovered in 1935 by Scottish physicist Sir Robert Alexander Watson-Watt—to warn of approaching planes while they were still miles away.” The challenge was identifying the planes and whether they were friends or foe.
“The Germans discovered that if pilots rolled their planes as they returned to base, it would change the radio signal reflected back. This crude method alerted the radar crew on the ground that these were German planes and not Allied aircraft (this is, essentially, the first passive RFID system).”
In Part 1 of this series, we explored the humble beginnings of department stores, supermarkets, and the first use of a bar code in a physical store. In Part 2, we expanded our innovation journey to discover the evolution and success of ecommerce, smartphones, and robots.
This Part 3 focuses on technologies that were originally invented to secure profit (cash register), property & high-risk areas (CCTV Camera), and consumer products (Electronic Article Surveillance or EAS).
Multiple of these originally envisioned security technologies transitioned into powerful data collection tools that optimize and increase the profitability of store operations. Great pleasure in one of my current roles to be working on next generations of multiple of the solutions in this series.
It might be surprising, but the original purpose of the cash register was to stop theft. The inventor was James Ritty, a saloonkeeper in Dayton Ohio.