The Ongoing Battle: The Current Impact of Theft in Retail

The Ongoing Battle: The Current Impact of Theft in Retail

Retail is fast paced and ever changing, and as certain as emerging technologies and innovations help provide a frictionless experience for customers, retailers must also look for new ways that product theft can hinder the service they provide.

Retail theft isn’t just a financial burden for retailers, it also impacts the overall shopping experience and trust between customers and retailers. There is also personal risk involved, as associates make attempts to intercept thefts in progress.

Let’s explore the current state of theft in retail and explore its far-reaching consequences:

The Erosion of Margin:

The most apparent and, arguably, the most impactful result of retail theft is financial loss. Shoplifting, employee theft, organized retail crime, and fraudulent activities can all contribute to a drain on profit margins. According to the National Retail Federation, in the United States alone, retail shrinkage due to theft amounted to over $100 billion in 2023 and is projected to grow year-over-year.  [1]

These losses directly affect retailers' bottom lines, leading to higher prices for consumers, potential job cuts and even store closures. In fact, retailers are beginning to shutter locations in metropolitan areas due to continued loss and shrinkage. [2]

Even though such closures by retailers, both large and small, are unfortunate, especially for the communities they serve, they are a sign of the times. 

The Impact of Theft on Consumer Experience:

Retail theft doesn’t just impact retailers’ ability to remain profitable, it impacts their image with their consumers.

Increased security measures, such as surveillance cameras, anti-theft devices, and security personnel, may make customers feel uncomfortable and cultivate an unwelcoming atmosphere. In some cases, this can be seen as “sales prevention” versus “loss prevention”.

Although it’s not uncommon to see products behind theft-preventing glass panes and secured by lock-and-key, it prevents consumers from the ability to move unrestricted through their shopping journey. With the high demands of shoppers today, married with the staffing concerns retailers face, this is a lingering concern. 

In addition, long lines, extra security or receipt checks can also add to the frustration of legitimate and loyal shoppers. Moreover, the unavailability of popular products due to theft or the need to keep them behind locked cases diminishes the convenience and spontaneity of shopping. As a result, customers may opt for online shopping or alternate retail channels, or – in worst case scenarios – move onto different brands to avoid such inconveniences.

Limited Product Availability and Higher Prices:

Losses of this sort affects the availability and accuracy of products, particularly high-value items that are frequently targeted by thieves.

Retailers are forced to invest in preventive measures and security systems, diverting resources through unplanned expenses that could otherwise be used to improve product selection, inventory management, and customer service.

In some cases, the continuous loss of high-demand items may lead to increased prices as retailers attempt to recover their losses. This not only affects consumers but also places a burden on retailers who strive to strike a delicate balance between profitability, credibility and affordability. The impacts can also be felt beyond brick-and-mortar locations, trickling into the retailers’ eCommerce operations, as well.

What Happens to eCommerce?

While the impact of theft in brick-and-mortar stores is significant, the rise of eCommerce has brought about new challenges.

As mentioned above the impact of inaccurate inventory can be a significant hurdle for customer experience. Shoppers tend to research product availability online before venturing into stores. If a retailer’s website says a product is available online, but the product isn’t available when the consumer takes the time to go to the store to purchase, it can significantly damage that consumer’s opinion of the retailer. 

The same concept applies for click-and-collect or buy online, pick up in store (BOPIS) orders. It becomes a memorable inconvenience for customers when they are notified that the product they wanted and ordered online is out of stock.

“Porch piracy” has become a relatively new concept of retail theft that that can dampen consumer opinion regarding a retailer’s eCommerce service. As packages are stolen from doorsteps at an increasing rate due to the explosion of eCommerce trends, it leaves eCommerce-based retailers searching for methods to prevent and combat such nefarious practices. Among the methods are  requiring signatures, implementing secure drop-off locations, or utilizing package lockers. These measures, though necessary, add additional costs and complexity to the delivery process, further impacting the overall efficiency and customer satisfaction.

The Ultimate Impact - Trust and Reputation:

Retail theft ultimately can erode the trust between retailers and consumers. Shoppers expect a safe and secure shopping environment, and instances of theft can leave a lasting negative impression from so many different perspectives.

Retailers must work hard and strategically plan to regain and protect their consumers’ trust through enhanced safety and security measures, transparent communication about theft prevention, and robust policies that protect the shopper. As you can likely guess by now, that failure to address these concerns adequately can result in reputational damage and the loss of loyal customers, ultimately impacting long-term sustainability and growth.

In Summary:

The impacts of retail theft can extend far beyond the immediate financial loss retailers experience.

It affects shoppers, product availability, pricing, and the overall brand reputation of retailers. As theft methods continue to evolve, retailers must invest in preventative measures to prevent losses and maintain a secure shopping environment.

By striking a balance between security, associate education and customer experience, retailers can protect their interests while fostering a sense of trust and loyalty among their customer bases. Only through collective efforts and innovative solutions can the retail industry combat the ever-evolving challenges posed by theft in today's marketplace.


[1] https://nrf.com/media-center/press-releases/nrf-reports-retail-shrink-nearly-100b-problem
[2] https://corporate.walmart.com/newsroom/2023/04/11/walmart-announces-closure-of-four-chicago-stores