Higgins: Automation could be a problem with retail theft

Sean Higgins

Heading into the holiday season, the retail industry is facing an increase in shoplifting and possible solutions to prevent shoplifting. The growth may be an unintended consequence of another trend: automation.

While stores have fewer people manning them, thieves have felt emboldened. Trade groups are pushing for new federal legislation to help solve the problem. A better solution would be for businesses to realize that workers are a bigger anti-theft asset than they think.

Retail businesses are hit hard by theft. The National Retail Federation (NRF) trade group reported last year that “skid,” the industry term for shoplifting, accounted for $112.1 billion in losses in 2022 to the industry, up from $93.9 billion dollars in 2021. The NRF has yet to release figures. for 2023, but an industry source indicated that the problem has not eased.

A narrower survey by Jack L. Hayes International, a loss prevention consulting firm that focuses on just 22,000 stores, put total theft losses at $7.1 billion in 2022, up from 4 .9 billion dollars in 2019. This covers everything from the traditional “five”. -fingertips” of common thieves who steal things like candy bars from organized crime groups that target stores, dive in and rush out as fast as they can.

Grand thefts don’t just happen in big urban centers like New York. Newsweek reports that Chattanooga, Tennessee, had the highest burglary rate in the country, with 89.83 incidents per 100,000 people. Next was Fayetteville, North Carolina at 83.43. The caveat here is that stores frequently do not report incidents of shoplifting, not seeing it as worth the time and trouble to pursue in court. Therefore, most experts assume that there are gaps in the data.

As many consumers have noticed, the industry is responding by putting the goods behind the wheel. The National Retail Federation says stores are also looking to high-tech solutions to deter shoplifting.

But legislative remedial efforts seem irresistible. The Combating Organized Retail Crime Act, for example, would create an organized retail theft division within the Department of Homeland Security. CNBC reports that as of 2022, nine states have passed laws increasing the penalty for retail theft, and many more are considering it. Florida made “organized retail theft” a felony.

A much more direct and easy solution might be the oldest and simplest: hire more people to monitor the floors. Follow the stores. This will reduce opportunities for would-be thieves and encourage shop owners and workers to stop theft when it happens. It will also make the stores seem more like a part of the community where friends and neighbors work and less like the big vending machines they have become.

Anyone who has patronized a large retail store in recent years, especially in urban areas, has experienced things being closed and the way stores have become ghost towns, largely devoid of staff. Most stores now mainly use self-checkout service and have skeleton teams running the location. Trying to buy something that has been closed can seem like a tedious and time-consuming endeavor for a customer if there are no workers nearby. It can be especially annoying for those old enough to remember when they could just pick those things up and bring them to the counter.

With so few people tending the store, is it any wonder that shoplifting is on the rise? Shoplifting is a crime of opportunity, after all, and opportunity has never been more abundant. “Here there were rather a lot of self-service checkouts and how the reduced patronage offered by store associations can lead to higher levels of theft. And of course, psychologically, thieves feel more comfortable/less problematic stealing from a car than a person,” Emmeline Taylor, a professor of criminology at the University of London, said in an email.

Retail executives have realized the problem, says journalist Marc Fisher, author of a recent study on the rise of shoplifting for the Atlantic Monthly. They are struggling to figure out what to do, Fisher told this author.

“Every retail industry executive, retail security expert and criminologist we spoke to cited automation as one of the key causes of the current crisis. The shift over the past few decades to automating everything from checkout to store security (cameras, AI monitors, programs like the ones I described in the article) has been accompanied by large staff cuts, which in turn have produced in part as a cost saving. measure, and perhaps more often because of the difficulty in hiring and retaining store workers,” Fisher said in an email.

In short, there is still no substitute for a pair of human hands and eyes. Most stores have cameras that watch all areas, for example, but the cameras still need someone to monitor them, in addition to people on the floor who can be alerted to stop would-be thieves. Otherwise, the cameras are just an elaborate home-movie system.

Auto-registration can also drive away paying customers. Amazon largely abandoned its experiment with cashier-free “Just Walk Out” grocery stores in early 2024 when it realized potential customers didn’t prefer it. It often took hours for customers to get their receipts because purchases were monitored by off-premises cashiers via cameras. Many customers did not like having to do tasks like weighing products.

Interestingly, the big retail chains don’t seem to be hiring fewer people overall. CVS Pharmacies, for example, had 7,800 stores in 2014 and employed 217,800 people, according to federal filings. They had an average of 28 employees per store. This year, CVS reported 9,400 stores and 300,000 employees, for an average of 32 employees per store. Therefore, automation does not reduce the total number of employees.

But the growth clearly hasn’t translated into more people specifically working in stores. Rather, automation seems to have coincided with more hiring elsewhere within corporations. CVS announced in October that it was cutting 2,900 jobs and specifically said the positions affected would be “primarily corporate roles.” Jobs in stores and pharmacies, the corporation said, would avoid the axe, presumably because they can’t afford to cut further there.

The lack of store staff means that not only are there fewer workers to spot shoplifting, but they are more likely to be reluctant to try to stop shoplifters as they have fewer colleagues to back them up should the situation escalate . Even if workers have the backbone to try, stores often don’t want them to act, fearing injury and potential liability. The NRF reported in 2023 that 41 percent of retailers surveyed said “no employee is authorized to stop or apprehend shoplifters,” up from 38 percent in 2022.

Susan Judith, a DC-based communications director, witnessed this when she worked for a major retail chain during the COVID pandemic. She declines to identify her client, but told this author, “They had a policy of not hiring shoplifters. Employees would be in trouble for trying to stop the theft. Needless to say, word got out that if you dropped into one of these stores and helped yourself to merchandise, no one was authorized to detain you or even hire you. Amazingly, this has led to an unsustainable level of decline.”

The position of the shops can be understood. In most cases, prosecuting the thieves will be more expensive than anything the store can recover in court and cause pain in the surrounding community. But it’s clearly a self-defeating attitude if it opens the door, figuratively and literally, to further theft.

And finally, the broader American culture seems more accepting of theft if it is framed as stealing from faceless corporations, not individuals. The fewer people tending a store, the less shoplifting feels like stealing from people. This may be a consequence of socialism experiencing a revival among the youth. Lawmakers like Vermont Sen. Bernie Sanders, Massachusetts Sen. Elizabeth Warren, and New York Rep. Alexandria Ocasio-Cortez have all built a following by championing redistributive economics and disparaging corporations. People are less likely to have trouble demolishing a business if they believe that capitalism itself is wrong.

Management must remember that workers are an asset, not just for work productivity, but also for the intangible human qualities they bring to the shopping experience: the pride they take in making sure their section is clean and well-stocked; the assistance I can provide to customers looking for the right item; or the ability to respond to unusual situations, such as a client having a health emergency. Thieves are less likely to steal if they see several people watching, not just one.

Fixing the theft crisis does not require elaborate federal legislation or tougher criminal sentences or tighter security measures or more elaborate surveillance. More workers are needed. This is something that management can easily fix. It will cost more, of course, but it’s a worthwhile investment.

Sean Higgins is a senior labor policy researcher for the Competitive Enterprise Institute.