Insight-Driven Retailing Blog

In the retail industry shrinkage refers to the loss of product, usually from theft. (If you're a Seinfeld fan, then the term means something entirely different.) In recent years, organized crime has found that retailers are easy targets, and online auction sites tend to make it easy to unload stolen merchandise. In my home state of Texas, its estimated that we loose $77 million in state sales tax, and that number doesn't include local sales tax. No wonder they rarely mow the medians -- there's no tax revenue for road maintenance!

These organized groups tend to find a method that works, then repeat it across lots of chains. This adds up to around $30 billion a year in stolen merchandise. Working alone, each retailer is often out-manned, but retailers that normally compete are now working together to share valuable crime patterns. And by building their cases together, they tend to garner more attention from local police.

"We see a lot of people who had been in the business of dealing drugs but who find out they can make more money in stolen retail property trade with a lot less chance of being sent to prison," said Frank Muscato, Walgreen's organized retail crime coordinator. Just keep the take under $1500 and the crime is classified as a misdemeanor in most states. That beats the heck out of selling drugs.

The NRF Loss Prevention Conference & EXPO is being held June 15–17 in Los Angeles this year. Its a chance for retailers to hear about these problems and solutions.

I for one don't want to pay higher prices to support a thief, so if retailers need to curb my shopping experience a bit, I'm for it.

Update: Siobhan recommends the article Annals of Retail, “Stop, Thief!" (registration required for full article).