Canadian retailers take bite out of crime - Retail Council of Canada's Retail Loss Prevention Conference

Discount Store News, July 17, 1995 by Jim Fox

TORONTO - Canadian retail chains as Zellers, the Bay and Kmart Canada are fighting back against shoplifters and dishonest employees who in many cases are profiting more than the companies are these days.

The growing problem of theft is robbing customers of better prices and service as retailers are forced to absorb the losses and pay a hefty price for a vast array of loss-prevention devices, the Retail Council of Canada said.

"Thieves have profited more from the retail trade than actual retail operators have for too long," said Diane Brisebois, president of the Retail Council of Canada. "A relentless approach is the only way Canadian retailers can beat down this pervasive and intolerable crime.

Shoplifters and employees walked out of Canadian stores with a "cool $2.4 billion Canadian [$1.75 billion U.S.]" in merchandise last year without paying, the Canadian industry group survey estimated.

Added to that is another $600 million lost in bookkeeping errors, increasing the shortfall from merchandise "shrinkage" to $3 billion Canadian.

"A lot of Canadians perceive shoptheft as a trivial crime," Brisebois said. "The results of this year's survey quickly dispel that myth," she told the council's 1995 Retail Loss Prevention Conference.

"The average stealing - not shopping - trip nets the thief $82. That's more than a candy bar or a pair of socks," Brisebois said. On average, employees take away $203 per incident, as easy access to merchandise allows them to steal more.

Chains have begun turning to civil lawsuits to force thieves to pay the costs of their security measures. The cost of innovative theft detection devices is another concern for retailers with slim profit margins.

The 1995 Shrinkage Survey of Canadian Retailers found that 80% of the $3 billion loss can be attributed to shoptheft. That amount - $2.4 billion - was an increase of about $15 million over the previous year. Retailers report that 50% of shrinkage is due to customer theft, 30% employee theft and 20% paperwork errors. In total, people posing as customers helped themselves to $1.5 billion in goods while employees walked off with $900 million in unpaid merchandise.

On a daily basis across Canada, shoplifters steal $4.0 million, dishonest employees take $2.4 million and faulty paperwork costs $1.6 million, the council found.

"It's time Canadians woke up to the fact that this is not a petty, victimless crime," Brisebois told the conference. "Customers must realize how this crime impacts on them. Stores are forced to adjust prices to compensate for loss - they cannot invest as much in operational efficiency; and staff is cut back or underpaid. As a result, consumers are robbed of competitive pricing and exceptional service levels."

The council's report said that book and greeting card retailers, luggage, leather and sporting goods stores are the biggest targets for thieves. Some headway in the fight against crime has been made by department stores, shoe and hardware stores, lumber dealers and pharmacies, likely because of increased security measures.

"The loss from shrinkage is shocking, and in some stores it exceeds your profits," Don Beaumont, president of Kmart Canada, said at a meeting of the Purchasing Managers Association of Canada. Thefts are more prevalent in urban areas and can be partly attributed to the effects of a lingering recession, he said.

"This is putting tremendous demands on retailers to invest in equipment such as cameras that can zoom in on shoplifters," Beaumont said, noting that some Kmart stores have as many as 17 expensive cameras in operation.

Kmart Canada is experimenting with taking civil action against shoplifters nabbed at 20 of its stores. In addition to criminal charges, Kmart's third-party civil procedures would slap shoplifters with a lawsuit to recover security costs of several hundred dollars.

"We're having to take some fairly severe measures," Beaumont said, adding that if successful, Kmart will expand the program to its 128 Canadian stores. Kmart is "hoping it's a proactive way of deterring theft," he added. As for internal crime, the best way to fight back is to hire honest people and treat them well, Beaumont told the loss prevention conference.

"When you treat people fairly, they don't feel right about cheating the corporation," he said.

The Hudson's Bay Co. and its Zellers chain began using the civil courts last year out of frustration to pursue shoplifters who might be treated lightly by the criminal courts. They attempt to recover some $325 in costs through the courts, including small claims courts for fast action.

Assisting the retailers is Milton Chambers, a lawyer with Acclaim Civil Loss Recovery Systems, who said the criminal court backlog often means shoplifters are sent away with light terms of a few hours of community service or viewing anti-theft films.

Shoplifting can be deterred more effectively if thieves realize they'll have to pay up for their crime and the stores' costs if they're caught, Chambers said.

The retail council said that after a "slight improvement" in shrinkage numbers in 1993, retailers lost ground in the latest survey. Average shrinkage rose slightly to 1.84% of sales from the previous 1.72%, which "should be considered in light of declining retail margins and still-weak profit margins."