Do tough economic times mean more customers are resorting to the 'ol five finger discount? Not necessarily, as Raghu Rajakumar reports.
Cause and effect
While high long-term unemployment levels are closely related to stronger theft rates, it is too early to consider the economic downturn in Australia as the reason behind any rise. However, analysis from business information firm IBISWorld does indicate a strong relationship between long term unemployment and property crime such as shoplifting.
Trends from the Australian Bureau of Statistics indicate a correlation between changes in the number of males considered 'long term unemployed' - meaning males who haven't had a full time job for more than two years - and changes in the number of property crimes in Australia.
For example, from 1997 to 2008, the total number of long term unemployed males dropped from 1.03 million to an estimated 262,200 in Australia. Over the same time frame, despite a rising population in Australia, the total number of 'other thefts in Australia', the category which shoplifting is categorised in, dropped from 530,881 to approximately 486,330.
Statistical analysis of year-on-year results by IBISWorld show the decline in long term unemployment, contributed to approximately 20 per cent of the decline in 'other thefts'.
In the now
Before we look at current shoplifting figures, let us consider the current economic climate. Total retail sales in Australia are expected to be worth approximately $350.1 billion in 2008/09, however, increasing uncertainty regarding the state of the economy along with strained consumer sentiment and higher unemployment are creating difficult trading conditions during the year.
Has this had an impact on retail theft?
The latest figures from the New South Wales Bureau of Crime Statistics and Research indicate the number of recorded incidents of retail theft as 'stable'. There were 20,236 reported cases for the 12 months ending March 31, 2009 compared with 18,283 cases for the 12 months ending March 31, 2008.
Interestingly, reports also indicated there was a shift in the types of items stolen from retailers. The shift was a move away from luxury items such as sunglasses and jewellery towards food and alcohol, hinting that shoplifters were adopting the same recessionary mindset as consumers. Australians are generally delaying purchases of discretionary products and focusing on basic, everyday goods from mid-market retailers or discount department stores such as Target, Kmart and Big W.
While IBISWorld expects the number of total crimes to ease in coming years - falling at an average rate of 0.4 per cent per year to 1.03 million over the five years to 2014 - the rate of "other thefts", including shoplifting, are forecast to rise by 1.2 per cent in 2009 and again by 0.9 per cent in 2010. Growing levels of long-term unemployment are expected to a strong factor behind the rise, with the overall unemployment rate in Australia projected to be almost seven per cent by 2010.
Fault lines
One of the biggest challenges facing retailers in Australia is the extremely high rate of employee theft and fraud. Employee theft costs the retail industry approximately $3 billion annually and generally contributes approximately 55 per cent of total shrinkage, a significant impact on profitability.
Despite ongoing efforts to reduce external consumer theft, retailers face the bigger challenge of reducing theft internally. Key products popular with employee theft include cosmetics, face creams, perfumes, alcohol, CDs and DVDs, fashion, electronic games, cellular phones and watches.
Most instances of internal theft are thought to occur at the checkout area, in the stockroom or delivery area and on the sales floor. While some staff simply "pocket" the stolen goods, others can commit fraudulent refunds or markdowns.
In many circumstances, the cost of these discrepancies is transferred to consumers. While shrinkage costs directly impact the bottom line of the retailing industry, if these costs were passed on to consumers they would be equivalent to add an annual 'tax' of around $330 per household.
The impact can be minimised by ensuring staff are satisfied in their jobs and employers are well-trained and have effective systems to detect and report security breaches.
Effective systems include consistently assessing areas of store or business which are subject to losses, educating employees and consumers, implementing risk management strategies such as CCTV, surveillance and electronic tagging as well as monitoring and updating theft prevention programs.