Shoplifting, how much does it cost our community?

If you bundle shoplifting, fraud by employees or suppliers, and “shrink” together, the Global Retail Theft Barometer reports that Australians pay some serious money as retailers try to make up for those losses. In fact, according to their 2014-2015 report, the cost per household is over $424 per year. The Herald Sun reports, “stores nationwide lost an estimated $2.4 billion in stolen goods and stocktaking and till errors.” In early 2016, The West Australian reported that retailers in that region lost about 3 per cent of their annual sales. That is $990,000,000 in Western Australia alone.

Shoplifting statistics are not getting better. The NSW Bureau of Crime Statistics and Research report from early 2016 states that the rates of stealing from retail stores rose 7.9 per cent over the previous 5 years. In terms of increasing numbers of incidents, it is second only to indecent assault and sexual offences.

Shoplifting may not be the most serious crime in Australia. However, it generates considerable costs to society. Arresting, charging, and sending offenders to court costs money. However, there are also costs passed on to consumers by retailers looking to recoup their losses. This means that, in the end, consumers pay the price of shoplifting.

What is Shoplifting?

Put simply, shoplifting is the act of taking an item from a store without paying for it. It is a form of stealing, or larceny. As Division 5 of the NSW Crimes Act points out, a person commits larceny when they take personal property belonging to another without the consent of the owner. Stealing is only considered a crime if the perpetrator intended to permanently deprive the owner of his or her property. Under the NSW Crimes Act, all larcenies are considered the same in the eyes of the law regardless of what was taken.

In Australia, shoplifting is a summary offence. According to The Law Handbook, the most common result of a shoplifting offence is a fine. However, repeat offenders may face jail time. Punishments may vary according to the value of goods stolen. In NSW, if the value of the property stolen is less than $5,000.00 then a charge of larceny in the Local Court carries a maximum penalty of a $5,500 fine and/or 12 months imprisonment. If the value of stolen goods exceeds $5,000 a larceny charge carries a maximum penalty of a $5,500.00 fine and/or 2 years imprisonment in the Local Court. In the District court, the maximum penalty is 5 years.

Why do people shoplift?

People shoplift for a number of reasons. Some people do it for excitement; some people do it out of necessity, while others do not even know they are doing it. However one thing is true, out of all crimes shoplifting is viewed as a ‘low risk/non-offensive crime.” Often shoplifters rationalize it as “no big deal” because no one gets hurt or do not even realize that it is an indictable offence.

There are also those who cannot help it and others who are opportunistic shoplifters. For example, twenty-five per cent of retail shrink is due to employee theft, according to Inside Retail who say weak pre-employment screening procedures and reduced supervision is making it easier for employees to snatch items at work.

The lure of making money selling items online is making shoplifting more attractive to some thieves, according to Mark Gentle, Checkpoint Systems Australia managing director. It is the small, easy to conceal but high value items such as mobile devices, perfumes and fashion accessories that are the most targeted by shoplifters and dishonest employees. Research shows the items most stolen are denim, batteries, mobile device accessories and surprisingly infant formula.

Tallying the Costs of Shoplifting

Staying in business is all about profits. When a business experiences losses due to theft, they have to find a way to make up the lost revenues. In most cases, this means increasing the price of items. Those prices carry a built-in component for expected theft losses.

Making up shoplifting profit losses is not simply a case of selling another item. Stores cannot survive only by recouping the profit margin on the stolen item, according to the American small business journal Chron. Profit margins incorporate many factors beyond the wholesale and retail price of an item. Building costs, employee salaries, insurance and utilities all factor into profit margins.

A Rutgers University publication provides the example of a store with a 10 percent profit margin. When someone steals an item worth two dollars, the retailer must sell $20 in merchandise to make up for the loss. When it comes to stores with very low profit margins (such as grocery stores, which typically have profit margins of 1 percent), a $7 shoplifted item requires selling $700 of food and goods.

It costs money to prosecute an offender. For all of Australia, the expenditure for criminal courts amounts to $780 million, which the Australian Institute of Criminology breaks down to $44 per adult. While there are many crimes beyond shoplifting, shoplifting plays a part in ever-increasing court administration budgets. Funding for the courts comes out of taxpayers’ pockets, as do the salaries of the arresting officers, which is why as Shopliftingprevention.org points out, there is a trend to not apprehend or prosecute offenders. Often shoplifting incidents go unrecognized, unreported or unresolved because it just does not seem to be a valuable use of police and prosecuting resources.

Some argue that stores make shoplifting too easy for criminals. Taking certain precautions may help lower the incidence of shrink. However, additional training, purchasing equipment and hiring security all means increased expenses, which are then passed on to consumers in higher price tags.

Whether it impacts you as a consumer, parent or you are law abiding citizen who suddenly finds yourself on the other side of the law for nipping an item off the shelf; shoplifting is a social and economic issue that affects us all.