Report: Jump in store theft cost your family $435 - Nov. 10, 2009

New global report shows that U.S. merchants suffered an almost 9% jump in store theft over the past year, forcing consumers to pay more for goods.

By Parija B. Kavilanz, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) -- U.S. merchants suffered one of the biggest jumps in shoplifting and other retail crimes over the past year, a trend that cost the average American family about $435, according to a new report Tuesday.

Retail crimes such as shoplifting, employee theft and supply chain fraud rose 8.8% in the United States, to $42.2 billion, in the year ended in June, according to the 2009 Global Retail Theft Barometer report from the U.K.-based Center of Retail Research. In the prior year, retail crimes rose 1.5%.
"It is a shocking increase and something that retailers need to get to grips with quickly," said Joshua Bamfield, author of the report, which identified top trends in retail crimes in 41 countries, including the United States, China, India, Europe, Japan and Australia.

The report was based on a confidential survey of 1,069 large global retail companies
Bamfield said the 8.8% rise in retail crimes in the United States -- the biggest retail market in the world -- was largely spurred by the recession and affected about 1.6% of the nation's total retail sales in the 12-month period.

Reflecting the global scope of the downturn, he said retail crime rose 5.9% to $115 billion.
He said employee theft cost merchants about $18.7 billion in the period, shoplifting cost sellers $15 billion, and processing and other supply chain errors or fraud cost retailers about $6.8 billion.
What's worse is the cost of store crimes to consumers, which the report estimated at being about $435.17 per family over the past year.

"Prices on products would be lower on average if merchants did not have to incur lost revenue from store crimes," Bamfield said.

Most-stolen products

The report said thieves bagged a wide range of items, but tended to focus on expensive popular branded items. These included perfume, cosmetics, razor blades, small leather products and electronics such as the Wii gaming system, iPods and cellphones.
Satellite navigation equipment and laptops were also vulnerable categories, the report said. In supermarkets, thieves were targeting fresh meat and cheese.
Bamfield said the biggest driver of store theft is for resale. "It's primary to feed the habit for extra money," he said. "A lot of it funds criminal activity. So there's a societal cost on top on an economic cost of these trends."

And while merchants are at the frontline of these crime sprees, Bamfield said the repercussions are felt from manufacturer to store shelf.

"Retailers don't accurately know how much merchandise they have in stock if deliberate errors are made in processing that information," he said. "This can affect suppliers managing their production. Manufacturers and distributors are are impacted."

What's more worrying is that Bamfield said this uptick in retail crimes could last for a while. 'I think this trend is more than just a temporary response to the recession," he said.

For its part, the National Retail Federation (NRF) maintains that merchants cannot be solely responsible for trying to prevent organized retail crime. The group said tougher federal legislation is needed to contain the problem

"New federal laws will make organized retail crime part of our federal criminal statutes, giving law enforcement officers and prosecutors the tools they need to put these criminals behind bars," Joe LaRocca, an NRFofficial, said in a report earlier this month.

Report: Jump in store theft cost your family $435 - Nov. 10, 2009