Wednesday, May 6, 2009

Shrinkage and Shoplifting

I recently read a letter posted on a site by a lady about how she was traumatized when store staff suspected her of shop lifting and gave her a hard time. This set me thinking, especially when I read in another report that India has topped the Asia Pacific region in the Annual Global Retail Theft Barometer-2008 survey. Shrinkage is one of the bigger headaches for a corporate retailer and sometimes is the tipping point in making a store viable or not.

Very simply put shrinkage is the difference between the actual volume & value of the products in the store Vs what is being reported in the system.

There are various reasons why this happens and shoplifting or theft is one of them. There are various other reasons that contribute to this such as, wastage, improper billing, wrong receipt of goods, etc. I would focus on shoplifting in this post.

Most retailers tend to believe that customer theft is the largest contributor to shrinkage followed by employee theft.

How true and valid this is, is anyone’s guess. The reason I am skeptical is that just a few years ago, there have been reports of Employee theft being the single largest reason followed by customers. I find it funny that the trend has reversed, unless these very customers are being hired as staff nowadays!!!

The most common items for shop lifting are the obvious culprits. Expensive and branded products like perfumes, etc. or small impulse items like razors, blades, etc.

Now, the moot point is, Why do people do it? There is a small percentage of people who pursue this as a criminal career and also another group who are compulsive shoplifters or kleptomaniacs. But the majority is simply normal people who have succumbed to a moment of temptation coupled with an inability to pay.

On one hand I have seen our store staff apprehend a large group of women who would wear voluminous dresses and come to the store in Hyderabad as part of a well organized racket to literally cart away products after buying a few small items. On the other hand I have also witnessed an elderly man almost cry after he was intercepted for trying to take away a deodorant. His simple explanation was “I depend on my son and daughter-in-law nowadays and she says I don’t need any fancy products for my use. I sweat a lot and am miserable about it, plus don’t have money. It was just too tempting.”

Self service is here to stay as a retail concept. However in light of such instances, is there a social and human angle to keeping tempting products out of reach and behind a counter? If not, can we train the staff to differentiate and handle shoplifting differently, depending on the context?
Lastly, I also remember a lady who was intercepted with a few expensive cosmetics. Out came her phone and her spouse lands up. Incidentally he was a cop and surprisingly embarrassed by this instead of displaying the usual public servant bluster. No prizes for guessing what happened!


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