Retailers across the nation are grappling with an escalating crisis of theft and loss, a problem that has intensified in recent years as both shoplifting and organized retail crime soar. The rise in theft has been fueled by a combination of factors, including economic hardship, the ease of selling stolen goods online, and, in some areas, a perceived decline in law enforcement efforts. As a result, many businesses are facing mounting financial losses, leading to increased prices, fewer store locations, and even store closures. The ripple effect of this crisis is hitting both small businesses and large chains alike, threatening their bottom lines and the stability of the retail industry as a whole.
The consequences of rising theft and loss extend beyond the immediate financial damage. Many retailers are being forced to invest heavily in security measures such as surveillance cameras, anti-theft devices, and private security personnel. Unfortunately, these measures can only go so far. The emotional toll on employees, who face heightened risk and stress as they deal with theft, is also significant, leading to a decrease in morale and potentially higher turnover rates. Customers, too, are affected, as many stores implement stricter policies like bag checks or reduced hours, creating a less convenient shopping experience.
To mitigate the situation, the retail industry must adopt a multi-pronged approach. Businesses are being urged to collaborate more closely with law enforcement, pushing for stronger penalties for offenders and better tracking of stolen goods. Additionally, retailers are exploring new technologies such as artificial intelligence-driven theft detection and more sophisticated inventory management systems to reduce losses. Industry experts also emphasize the need for improved employee training, fostering a culture of vigilance and awareness without escalating tensions. With the continued rise of retail theft, it is clear that businesses must adapt quickly and invest in both preventative measures and proactive solutions to preserve their operations and maintain customer trust.
Stephen O’Keefe, President of Bottom Line Matters, said retail theft has been on the rise the past few years for a number of reasons ranging from a seemingly honest mistake of customer’s under-ringing at the self checkout, to the extreme violent group robberies perpetrated by organized criminal groups.
“Almost every retailer has experienced an increase in their shrinkage rate, and collectively that number in Canada has reportedly surpassed the $10 billion threshold,” he said.
Rui Rodrigues, Executive Advisor, Loss Prevention & Risk Management, Retail Council of Canada, said losses have increased significantly for retailers over the last five years. With the volume of theft increasing the volume of incidents involving violence has also significantly increased.
“Lack of severity of consequences from our judicial system for retail crime is one (reason). Retail theft has long been seen as a victimless property crime and in general criminals apprehended committing retail crimes face little or no consequences. As a result, we see a revolving door of retail criminals who are repeat, prolific and violent re-offenders who are arrested and let out the same day and back out re-offending,” he said.
“The growth of online marketplaces and many new ways to get products to the consumer has made it much easier for criminals to distribute their stolen goods. Organized retail crime has evolved. For example, we see more incidents of new organized thefts, like swarming events and an increase of marginalized individuals, who would previously steal for their own consumption, stealing to fulfill orders being placed by illicit markets, fence operations who prey upon them.
“On the positive side RCC has been working with retailers, police and crowns and government in some jurisdictions to collectively fight back against retail crime and ensure the more prolific criminals face harsher penalties. More is needed.”
Bruce Winder, a retail analyst, said the issue of theft and loss is a massive one for the retail sector.
“Some estimates put the loss at about $9 billion CDN per annum. Theft and loss has continued to grow significantly since the pandemic and one could assume it will continue to get worse unless a number of key measures are put in place across governments, law enforcement and retailers. There are different types of theft as well,” he said.
“Organized retail crime has grown and criminals have become more brazen of late. Violence on retail staff has also become a major issue. Why has theft and loss increased? A combination of economic, social, regulatory and technological changes to our environment over the last decade has led us to where we are today. It has become much easier to steal and sell stolen merchandise and the consequences have diminished.”
Michael Kehoe, Broker of Record for Fairfield Commercial Real Estate in Calgary, said 2024 was a high watermark for retail shrinkage for the retailers he is in touch with.
“And it’s a direct reflection of the challenging economic times for many Canadians. Across the country and especially in the inner cities there is a vibe of desperation as many people are struggling. Retailers are dealing with both external theft and increased internal theft and in a post COVID era, higher food costs among other factors are undoubtedly driving some Canadians to steal,” he said.
In the past retailers absorbed the losses, particularly those in the heavily competitive markets claiming to have the lowest prices. This means their bottom line took a hit. Some have been forced to close down their businesses for good, explained O’Keefe.
“Retailers have slowly begun raising prices to combat the effects of loss caused by crime. The honest consumer is now paying the price,” he said.
Rodrigues said retailers have had to make significant investments to protect themselves, eroding their profit to the point in some cases having to close their shop in locations where it is not sustainable or it is too dangerous to operate.
“Investments in third party security, paid duty officers, reduced merchandise on the floor or locking up merchandise, investing in technology to try to reduce losses, additional training for front line and managers,” he said.
Numerous consequences for retailers
Winder said the consequences for retailers because of this growing problem include: higher shrink costs, lower sales, higher labour costs, lower profits, higher retail prices, increased risk and liability for store staff, broken fixtures and other costs and difficulty recruiting workers in some areas.
“Some shoppers have become afraid to shop in person due to the risk of being caught at the wrong place at the wrong time. Insurance rates would go up as well,” he noted.
Kehoe added that the obvious effect on retailers is the cost of a range of security measures beyond just a few cameras and the odd security gate.
“Retailers are taking increased risk mitigation measures that in some cases impact the customer experience. I frequently see certain products that are locked up and this can be annoying to time-pressed shoppers and could result in lost sales as well as store employees checking receipts at the exits. Store owners are dedicating more resources towards theft and loss, and this includes hiring additional security staff to manage the problem,” he explained.
O’Keefe said retailers must take a pragmatic look at their strategy to deal with retail theft and loss.
“A retailer can influence external factors such as law enforcement response, or the justice system handling of theft, but they cannot control it. Allowing a trade association to fight those battles with lawmakers arming them with as much information as possible is the key to nudge those groups,” he said.
“The immediate changes however will come from internal control factors such as human resources, policies, technology, and physical security. Loss Prevention professionals refer to this as hardening the target. Keep in mind though, one size does not fit all. It is important to conduct a risk and threat assessment to make sure the solution is the right one for each business.
Rodrigues said the RCC is working very closely with retailers to help them have access to resources, tools, and a collective group including other retailers, the vendor community, police, prosecutions and government so they can have options to protect themselves and retailers should be at the table to ensure they benefit from the collective efforts.
“However, more needs to be done in general to reduce retail crime, including increased consequences / punishment for repeat prolific offenders and organized retail crime,” he said.
Winder said that at a macro level, the retail industry needs to work with governments and law enforcement at all levels to fix the issue which is complex.
“Efforts have been made but we have yet to see any material changes in bail reforms, tougher sentences and other deterrents. There is also an economic and social side to this as we have seen significantly more homeless people, especially in downtowns,” he stated.
“At a micro level, retailers need to implement store-specific counter measures which could include everything from: locking up merchandise (not a great solution), hiring more security guards, using source tagging/RFID tags, adding more CCTV cameras, wearing vest cameras, etc. All very costly and disruptive. These are Band-Aids vs. getting to the root cause of the issue.”
Theft is here to stay
Kehoe said theft and loss are here to stay, and retailers and facility security personnel tell him that it’s mostly the repeat, small percentage of thieves that are responsible for the majority of the losses.
“Store staff on the frontlines often know the individuals that are stealing from them repeatedly but the employees are restricted from doing anything when they see a shoplifter. Police resources and court systems are stretched, and often there are no consequences for stealing. It seems like a systematic problem that will cost everyone in the end,” he said.
“Many retailers utilize security cameras, electronic anti-theft alarms, security guards, locked display cases and security mirrors and store employees checking receipts at the exits. In Alberta, some liquor outlets are requiring customers to scan their IDs to enter the stores to make a purchase. While technology is a powerful tool, good old-fashioned retail sales staff on the floor can also be an effective deterrent.
“My grocery industry friends tell me that the self-checkouts are the flashpoints for theft. No number of cameras and other technologies can replace a well-trained staff member with good people skills and a keen eye and that is always the perfect deterrent for theft. Retailers need to train and invest in their people.”
Top Solutions to Combat Retail Loss Prevention:
- Advanced Surveillance Systems: Smart cameras powered by AI and machine learning are revolutionizing the way retailers monitor their stores. These systems can identify suspicious behaviour, track high-risk areas, and send real-time alerts to staff. Facial recognition and object detection further enhance the ability to catch thieves in the act.
- RFID and IoT Technology: RFID (Radio Frequency Identification) technology is becoming an invaluable tool for tracking products in real-time. By placing RFID tags on items, retailers can monitor inventory levels, detect potential theft, and optimize stock management. In combination with IoT devices, RFID allows for a more seamless and proactive approach to loss prevention.
- Employee Training & Culture Building: While technology plays a key role, employee vigilance remains crucial. Retailers are focusing on training their staff to recognize warning signs of theft, handle difficult situations, and foster a culture of security. A well-trained workforce is an essential line of defence against internal theft.
- Self-Checkout Monitoring: With self-checkout systems becoming more popular, they’ve also become hotspots for theft. To combat this, retailers are deploying specialized surveillance cameras and sensors to track suspicious activities at these checkout points. Technology is now able to detect scanning errors, unpaid items, and other fraudulent behaviours in real-time.
- Data Analytics and Shrinkage Reports: Retailers are turning to big data to better understand the causes of shrinkage. By analyzing patterns from their point-of-sale systems, inventory reports, and customer behaviors, retailers can gain valuable insights that help fine-tune their loss prevention strategies. Predictive analytics can even forecast potential high-risk times or areas in stores, helping staff focus their attention where it’s needed most.
