For years Wal-Mart led the retail market with below average shoplifting rates. Recently though, shoplifting rates at the largest retailer are on the rise.
Industry wide, shoplifting rates have been in decline as retailers have implemented more security systems such as closed circuit TV and other anti-theft devices that are encoded into products. Even so, over the last few years, apparently, shoplifting is on the rise at Wal-Mart. So much so, that Wal-Mart has actually disclosed publicly that it is seeing an increase in shrinkage. No, not the kind George from Seinfeld experienced after swimming in cold water. Shrinkage is the industry term for inventory losses. Securities regulations require companies to alert shareholders to significant corporate developments that could affect the value of their holdings. Has inventory shrinkage become that bad at Wal-Mart?
Why then when the industry has a whole has seen decreases in shrinkage while Wal-Mart has seen an increase? There are four primary reasons that have been publicly debated at the reasons.
Many believe employee theft is on the rise. Several months back, Wal-Mart announced that they were changing the way employees were scheduled to accommodate peak shopping times. The concept also uses more part-time employees. While this sounds good for shoppers, it was not that good for employees. Rather than working a normal 8 hour shift, an employee may work only 4 hours to cover peak times on one day and/or maybe more hours on a Saturday to cover the busy weekend.
The end result that is being speculated is that employees are getting the shaft and are more prone to feel entitled to a free item or two when they leave the store for the day. If you were a full-time person who depending on what little pay you received and now it has been cut, you might feel entitled to pick up a few items. I am in no way condoning this, I am merely pointing out what may be happening.
The second reason is that has employees have become more discontent, they are more apt to NOT pursue other shoplifters. The general thought is that since the company does not care enough to treat me well, the heck with trying to stop that person who is stealing that item. Seriously, ask yourself, how many times have you seen someone walking out the door and the shoplifting detection system has gone off? I do not know about you, but I see it all the time. People just keep on walking and no one from Wal-Mart seems to care or check to see if a theft has just occurred.
The third reason is likely due to Wal-Mart cutting back on security. It has been widely reported that Wal-Mart has cut back on security when it went to the revised scheduling systems. With less people watching the front or back of the store, apparently, it must be easier to steal from Wal-Mart. The latest estimates put the Wal-Mart Inventory shrinkage at $3 billion a year. Yes, that is $3 billion with a B. When compared to the billions in sales Wal-Mart makes, the percentage is small, and again, is below industry norms. Still, $3 billion is a HUGE number. The question to ask, is it cheaper to hire staff to prevent shoplifting or is it cheaper to allow a certain percentage to occur as long as it remains at an acceptable level. That would be quite a study to undertake.
The final reason I believe shoplifting is on the rise is a decision Wal-Mart made to NOT prosecute smaller shoplifting claims. You may have seen the signs that say “we prosecute all shoplifters”. This has often been used as a deterrent to say that no matter how small, we will prosecute all shoplifting offenses. Well, I guess that is no longer the case.
Around June of 2006, several media sources reported that Wal-mart had implemented a new shoplifting policy which in effect said that they would no longer prosecute anyone caught taking merchandise under $25. Previously, the policy was to prosecute anybody who took at $3 in goods. No doubt Wal-Mart would have liked to keep this new policy quite, but much like anything the big behemoth retailer does, sooner or later, it gets leaked.
While this policy sounds like they are giving up, Wal-Mart reasons that they spend too much time catching the small-time crook who took a small item while the professional is walking out the store with many more hundreds of dollars of merchandise. While this thought process may have been true, no doubt the policy to relax the policy, as well as the reduction in security has had a negative effect on the bottom line.
It was also rumored that some police departments were over burdened with calls from Wal-Mart to arrest the small-time shoplifter. I sincerely hope that this was not the case.
Whatever the reasons behind the increase inventory shrinkage, it has become large enough that Wal-mart had to make a public disclosure.