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Preventing retail crime



Retail crime includes shoplifting, employee theft, fraud, robbery and violence to staff. Costs include loss of profitability, low staff morale, loss of work due to physical and psychological damage, and even loss of life. This manual concentrates on strategies and programs devised in a number of countries to prevent retail theft. Some are simple and inexpensive; others involve sophisticated technology and require huge outlays. The case studies included demonstrate the need to describe the problem properly before proceeding with crime prevention programs, to keep good records, and to evaluate those programs for effectiveness.


Introduction to Preventing retail crime

Retail crime includes shoplifting, employee theft, fraud, robbery and violence to staff. Costs include loss of profitability, low staff morale, loss of work due to physical and psychological damage, and even loss of life.

How serious is the problem?


In 1987, Coles-Myer, Australia's biggest retail chain, estimated that about 1 per cent of its turnover - $120 million - was lost to theft, that is, more than half its $219 million after-tax profit.

The Victorian Retail Association's guesstimate is that theft costs its members $70 million a year, while the police say shop thefts valued at $8 million were reported in 1987-88.

In the 1988-89 financial year Grace Bros security officers in 40 New South Wales stores apprehended 3,500 people, including staff. Thefts cost the store about $15 million per year. In 1987 the Coles-Myer Group - which includes Grace Bros, Coles New World, Fosseys, K-Mart and Target stores - announced that 45,000 people had been caught stealing. Of these, 1,400 were staff.

According to the Retail Traders' Association of New South Wales, the major department stores lose .875 per cent to 1.125 per cent per year in stock shrinkage, and boutiques - stores with an owner and up to two employees - lose up to 7 per cent. That extrapolates to $400 million a year in New South Wales alone, and $1 billion for the whole country.

Stock shrinkage - the difference between the book value of a retailer's stock at selling price and the actual value of stock on hand - is caused by unaccounted for stock through bad invoicing, receiving, despatch and bad recording; theft by staff; and customer theft.

How much does each of these causes contribute to shrinkage? Estimates for Australian department stores range from 30 to 60 per cent for customer theft, 30 to 50 per cent for staff theft and 10 to 20 per cent for poor paperwork (Challinger 1989). The National Retail Merchants Association in the United States rates these causes at a third each, while a large United States department store chain sees poor paperwork as the largest cause at 50 per cent, staff theft next with 35 per cent, and customers trailing at 15 per cent.

Employee theft

One security expert, who heads national security for a jeans chain, says Australian retail staff help themselves to $70 million worth of stock a year - 70 per cent of all shoplifting (Sydney Morning Herald, Good Weekend 16 August 1990). The National Retail Crime Prevention Council put shop theft by staff at $300 million per annum, half the then national estimate.

There are numerous ways for staff to steal from their employers:

  • straightforward theft of goods and money;
  • under-charging customer accomplices;
  • adjusting delivery dockets;
  • under-ringing purchases at the cash register;
  • fiddling the shrinkage records;
  • deliberately damaging goods to buy at staff discount;
  • using company time and facilities for personal projects;
  • increasing creditors' invoices and keeping the difference;
  • replacing perfect items with seconds in the warehouse or store;
  • adding a last-minute item to the receipt but not ringing it up;
  • picking up receipts for later inclusion in the register as 'voids' or 'refunds';
  • palming a forgetful customer's credit card;
  • fraudulent refunding; and
  • conspiracies of middle management employees.

Some retailers choose to turn a blind eye to much staff theft: they may be unwilling to hound staff because of the effects on morale, it may simply be cheaper to ignore it, or some degree of pilfering may be regarded as a perk to keep otherwise satisfactory employees. Besides, the cost can always be passed on to the customers.

Customer theft

Most customer theft goes unreported. An American study maintained that four out of 10 people had stolen from a shop at some time in their lives (Kallis & Vanier 1985), and in an Australian study, 54 per cent of Tasmanian 15-year-old boys and 44 per cent of girls surveyed admitted stealing from a shop in the previous three years (Warner 1982).

An American study showed that younger males seemed to shoplift more than younger females, but that girls caught up as they got older (Challinger 1989). These findings were supported by a Victorian victim survey, which found the average age of females detected shoplifting was 26.4 years and 19.4 for males.

Professional thieves

While most customer thieves in Australia are amateurs with no market and sometimes no need for the items they steal, there are individual professional thieves and gangs active in shoplifting. They often concentrate on items like cigarettes, which retain their resale value and are easy to turn into cash, and steal to order. The Retail Traders' Association discovered a scam in which thieves were concentrating on stealing large quantities of expensive supermarket items like tins of salmon, which indicates resale rather than personal consumption. And Australian shoplifting gangs are legendary in England.

Robbery and violence

Australia does not have to deal with the terrorist bomb attacks in major stores that happen in London, or with demonstrations against products and the high incidence of convenience store and supermarket robbery that plague the United States. There is no room for complacency, however, as the recent mass shooting at Sydney's Strathfield Mall demonstrates.

With high unemployment and a recessional economy, armed robberies are on the increase. Australian banks have taken this to heart and vastly improved their security, with very promising results (Clarke 1991). The reality is that any organisation with cash on the premises can expect to be hit: post offices are the latest target in Sydney.

Customer aggression has not been addressed in any detail in this volume: for valuable information on dealing with this growing problem, consult Protecting counter and interviewing staff from client aggression by Bruce Swanton and Daryl Webber, published by the Australian Institute of Criminology.

Possible solutions

This manual concentrates on strategies and programs devised in a number of countries to prevent retail theft. Some are simple and inexpensive; others involve sophisticated technology and require huge outlays.

Among the crime prevention strategies examined and, where possible, evaluated are:

  • target hardening, for example securing shopping trolleys, electronic surveillance systems and tags and chains;
  • crime prevention through environmental design (CPTED) strategies which improve visibility, cut down congestion and route potential offenders away from potential victims;
  • more efficient inventory methods:
  • the use of computers to track fraudulent transactions;
  • the use of the police force to prevent retail crime and the need for cooperation between security staff and police in apprehensions;
  • methods of raising the awareness of managers and staff about the problem;
  • the effectiveness of prosecution of offenders as a deterrent; and
  • what to do in case of armed robbery.

Wide isles and lack of congestion can prevent shop lifting
Wide isles and lack of congestion can prevent shop lifting

Finally, the case studies included demonstrate the need to describe the problem properly before proceeding with crime prevention programs, to keep good records, and to evaluate those programs for effectiveness.


The approach : situational crime prevention

Rational choice

While traditional criminology tended to see criminals as driven by their conditioning and environment, economics-based theories portray criminals as rational decision makers who base their decision to commit crimes on an analysis of the risks compared to the expected profits. That is, the criminal does a rudimentary cost-benefit analysis.

Rational choice theory makes the following assumptions:

  • offenders freely and actively choose to commit crimes;
  • the decision to commit the crime is made in response to the immediate circumstances and the immediate situation in which an offence is considered;
  • the motivation to offend is not constant or beyond control; that is, it is dependent on a calculation of costs and rewards rather than being the result of an inherited or acquired disposition to offend (Bennett 1986).

To put it concisely, one school of thought maintains that criminals analyse a given situation, and will not proceed if the going looks too tough.

Opportunity reduction

An approach to crime prevention which sets out to make the crime too difficult for the criminal by closing off opportunities to proceed is called 'opportunity reduction'. Opportunity reduction forms the basis of situational crime prevention.

The opportunity reduction school came to prominence in the 1970s with the work of (Mayhew, Clarke, Sturman & Hough (1976) and was expanded in the 1980s with the research done by the UK Home Office Research Unit (Clarke & Mayhew 1980) and Patricia and Paul Brantingham, the Canadian criminologists (1981). Strategies for opportunity reduction include the following.

Formal, organised surveillance: covers a range of observational strategies, from self-help groups such as Neighbourhood Watch, School Watch, Business Watch (in which people monitor their environment and report suspicious activities) through uniformed, sometimes armed security patrols to electronic surveillance via closed circuit television (CCTV).

Access control: means minimising, securing or blocking off ways in and out for potential offenders by natural surveillance; electronic surveillance; reception desks; entryphones; and target hardening such as better locks, secure doors, security grilles on windows, and alarm systems.

Employee surveillance: refers to vigilance by employees working in public places - bus conductors, car park attendants, receptionists, caretakers in schools or housing estates, and shop owners, managers or assistants - as a means of crime prevention.

Physical design and kinetic management: building on theories that criminals and victims find the shortest route, spend the least time and seek the easiest means to accomplish something - 'the principle of least effort' - this strategy maintains that, by manipulating the built environment, we should be able to minimise the contact between potential offenders and their victims (Felson 1987). This can be done by diverting flows of offenders away from likely targets or restricting flows to where they can be monitored, and by channelling potential victims away from risk.

Crime prevention through environmental design (CPTED)

The CPTED school of crime prevention emerged in the 1960s and the early 1970s, with a surge of interest in the possibilities of manipulating the built environment to prevent delinquency and crime. In Crime Prevention Through Environmental Design (1971), C. Ray Jeffery suggested urban design, including the design of streets, parks, terminals, super highways etc. could prevent crime by reducing 'opportunities'.

In Defensible Space (1972), a seminal work on CPTED, Oscar Newman established a definite relationship between urban design and crime rates.

For many goods, in particular cigarettes, it is wise to keep stock under lock and key
For many goods, in particular cigarettes, it is wise to keep stock under lock and key

Situational crime prevention

Criminology research has identified four major categories of crime and delinquency prevention (Perlgut 1981).

Corrective prevention attempts to prevent crime by ameliorating the social conditions which seem to lead to crime, for example, by job creation schemes, reducing overcrowding, creating viable neighbourhoods, rehabilitating slums and providing community health clinics and recreation facilities.

Punitive prevention uses police to deter crime through the police courts, the legal system and lawyers and gaols.

Mechanical prevention emphasises hardware such as locks, doors and protective grilles.

Environmental prevention manipulates building design and the relationship between buildings and their environment to reduce opportunities for crime.

Taken together, the last two categories comprise what is called the 'situational crime prevention' approach.

Successful security planning is likely to incorporate some aspects of all four approaches. This manual will concentrate on situational crime prevention, with an emphasis on crime-proofing different environments against property theft, vandalism, violence and nuisance behaviour.

Situational crime prevention seems most effective against offences which cluster in time or space, and which are of a high rate (Poyner 1986). While there is no doubt that situational crime prevention measures can reduce crime such as burglary, vandalism, shop crime and autocrime, there is some dispute about its effectiveness against violent crime.


It has been argued that situational crime prevention, by reducing an offender's opportunity to commit crime in a certain place or at a certain time, simply causes the criminal to go elsewhere to offend. Research seems to show that, where the offender is not strongly committed to a crime, and where the costs and risks of committing the crime are high, displacement is unlikely to occur (Bemmett 1986).

For example, a recent analysis of improvements in bank security found little evidence that bank robberies had been displaced to other states in Australia or that the fall in bank robberies had led to increases in robberies of other targets in Victoria (Clarke, Field & McGrath 1991). Where the converse is true, however, displacement does seem likely.

Planning a crime prevention program

Successful crime prevention measures must be tailored to specific conditions. It is therefore not possible to recommend measures which fit all situations. There is, however, a planning process which is likely to lead to successful crime prevention programs (Poyner & Webb 1987).

The following steps are recommended for devising an effective crime prevention program, and should be followed in order.

  1. Search for local crime problems.
  2. Select specific crime problems.
  3. Analyse the crime problem you have selected.
  4. Consider a range of possible measures.
  5. Identify who will implement the measures.
  6. Document the implementation process.
  7. Monitor changes in the crime situation over several years.
  8. Evaluate the program before proceeding with another.

For further information about planning a crime prevention program, see Susan Geason & Paul R. Wilson 1988, Crime Prevention: theory and practice, Australian Institute of Criminology, Canberra.





  1. You have the right to know before entry that the store conducts bag searches.
  2. You have the right to refuse inspection of your personal handbag useless it is large, The size of a sheet of foolscap paper will be used as a guide. THIS NOTICE IS PRINTED ON A SHEET OF FOOLSCAP PAPER. ANY BAG LARGER THAN THIS SHEET OF PAPER WILL BE INSPECTED.
  3. You have thei right to refuse interference with your person or with your bags. Inspection means that staff can look and not touch. You can be asked to assist inspection, e.g., by removing obstructions to visualise inspection.
  4. You can refuse inspection of your bags but you can then be asked to leave the store with your purchases and not return.


  1. Having entered a store knowing that bag searches are conducted, you have accepted the store's right to ask you to make your shopping bags available for inspection.


  1. Where there are real grounds for suspecting theft, customers may be held at the store and/or the police may be called.
  2. If a shopkeeper or employee forcibly interferes with you or your goods, you may complain to the management or the police.
  3. If you have comments about bag searches or your experience, please send them to the following address:
    Bag Search
    Department of Consumer Affairs
    1 Oxford Street,

Approved by the Department of Consumer Affairs and the Retail Traders' Association of NSW

Shoplifters' motives

Who are the shoplifters, and why do they do it?

All sorts of people shoplift, from 15-year-olds thieving for the thrill through depressed middle-aged women doing it to give themselves a lift, to poor people who cannot afford to buy goods. Males predominate among juvenile shoplifters, but the majority of adult shoplifters are women. One reason for the high amount of shoplifting by women is that the majority of shoppers are female, but when opportunity is equal, males are more iikely to shoplift than females (Buckle & Farrington 1991).

While shoplifting is the most common crime for which females are convicted or cautioned in England and Wales, more males are convicted or cautioned for shoplifting than females - 57,503 males as opposed to 35,371 females in 1989 (United Kingdom Home Office 1990).

In an English study on shoplifting in two counties, it was found that shoplifting was most prevalent among those aged over 55 and those 25 and under (Buckle & Farrington 1991). The authors speculate that shoplifting might be most prevalent among relatively young and relatively old people because these groups are the least likely to be prosecuted after apprehension.

Studies into the motivation of shoplifters point to economic disadvantage and psychological and social stress as major reasons for offending. In the case of women, it is difficult to disentangle economic and psychological motivations, as the two often go together. Marriage breakdown or separation, for example, are likely to cause a decrease in income and an increase in emotional stress for many women.

Accumulated stress

In a study of the economic situation and actual goods stolen, Elizabeth Yates (1986) divided 101 shoplifters into three categories-shoplifting for profit or gain and two levels of 'nonsensical' shoplifting, that is, not apparently motivated by need or desire. The groups were compared on demographic and relevant background information, psychological stressors preceding the offence and general psychological profile.

Yates found that shoplifters were more likely to be female than male. The nonsensical (unmotivated) shoplifters were more likely to be older, married, foreign-born, adopted, to have experienced unusual childhood stress and to be depressed and socially isolated in comparison to other shoplifters.

Yates suggested that an accumulation of stressors over time could account for shoplifting in some people.

Economic motives

According to JoAnn Ray (1988) little is known about the extent to which economic need shapes or contributes to shoplifting behaviour. If people are shoplifting because they need the merchandise and don't have the money to buy it, interventions such as psychological treatment may be useless.

Using two databases, Ray attempted to assess the influence of economic variables on shoplifting - a court sample, or random sample of 200 cases filed with a municipal court in an urban area in the north-west of the United States between September 1981 and October 1982; and a self-report sample, derived from a shopping centre survey designed to obtain shoplifting self-report rates, shoplifting profiles by age, attitudes to shoplifting, and perceptions of motives. 1000 anonymous questionnaires were distributed - 100 at each of 10 shopping centres, with centres chosen to provide a spread of socioeconomic conditions.

The two databases produced different shoplifting profiles. The self-report study suggested that shoplifters were likely to be young, white and female. The court sample study showed that men, ethnic minorities, the young and the elderly were more frequently arrested and referred to court.

An analysis of the responses of those sampled in the self- report study showed that shoplifting was strongly related not only to economic and employment variables, but to several other factors as well. People who shoplifted frequently were more likely than others to tick the following items as stressors:

  • Personal (psychological) stresses
  • regrets over past decisions ...
  • feeling sad and blue ...
  • Social stresses
  • being lonely ...
  • watching too much TV...
  • Family stresses
  • problems with divorce or separation ...
  • Physical stresses
  • personal use of drugs ...
  • sexual problems ...

Some of these factors could be related to, or caused by poverty, however, affirming the pervasive influence of economic factors on behaviour and attitudes.

The study also showed that shoplifters were more likely to agree that shopping made them feel better when they felt blue; that people shoplift because items are overpriced and that the stolen items would never be missed, but disagreed that they would get caught if they shoplifted.

Character defects

Five patterns of shoplifting were identified in a clinical study conducted in a court setting of 300 shoplifters, 67.6 per cent of whom reported weekly shoplifting (Moore 1984).

Overall, 56 per cent were males. Character defects rather than mental illness were the dominant form of pathology. Primary motivation in 67.6 per cent of cases was financial benefit.

Economic disadvantage appeared to be a contributing factor in 72 per cent of the adult chronic shoplifters. Although mental illnesses were distributed evenly between the sexes, nearly twice as many women were experiencing psychological stressors.

Moore's recommended treatment intervention was short-term crisis counselling followed by education which encouraged the offender to admit that shoplifting was a crime and to consider the realistic consequences of additional shoplifting (though it is difficult to see how this would address the poverty problem).

For the thrill of it

Shoplifting for the thrill of it is usually attributed to young people, many of whom are sucked in by the dare or by peer pressure - 'everyone is doing it'. In an American study (Klemke 1982) 42 per cent of a sample of young shop thieves identified as important the 'sporting motivation'.

The fact that males outnumber females as shoplifters in the teenage years could also mean that it is a manhood test in some circles.

Professional thieves

According to Weaver and Carroll (1985) the way shoplifters think depends on whether they are amateurs or professionals.

In their fascinating experiment involving shoplifters and how they assess crime opportunities, Weaver and Carroll recorded the words of 34 subjects-17 non-shoplifters (novices) and 17 expert shoplifters-walking through stores thinking aloud about shoplifting.

These findings emerged:

  • Expert shoplifters proved more efficient and strategic than non-shoplifters in their considerations.
  • Novices were deterred from shoplifting by fear, guilt and the possibility of being caught: experts, on the other hand, were deterred by strategic difficulties like the size of the item.
  • Any deterrent put novices off, but experts tended to see deterrents such as store personnel and security devices as obstacles to be overcome.

Prosecution as a deterrent


Does catching and prosecuting shoplifters prevent shoplifting? Does it deter those who are caught, all shoplifters, anybody? Given that prosecuting shoplifters is expensive, it is worth while looking at the value of apprehending thieves.

There is a certain amount of pessimism among retailers about the possibility of apprehending thieves, and some disagreement about the benefit of prosecuting them. Hard-liners insist on charging those they catch, while others find it too expensive and time-consuming to go to court about shoplifting. Many find it simpler to factor the cost of theft into the retail price and let the community as a whole bear the brunt. Who is right?

While most merchants would see failing to take some action against shoplifters as offering thieves an open invitation, it is not clear that juveniles and amateurs consider the consequences of apprehension, let alone a store's policy on shoplifting. They act on impulse, responding to an opportunity, and do not expect to be caught. Neither do professional shoplifters.

A survey of 1301 non-professional shoplifters was carried out by Shoplifters Anonymous in the United States. According to that study, 54 per cent of the respondents admitted theft patterns ranging from once a day to once a month. The psychological pattern that emerged was high tension during the theft, followed by euphoria (Canton 1987).

Canton postulates that amateur shoplifters become habituated to the high they get from successful thefts and that, by breaking the pattern and eliminating the euphoria, apprehension deters those who are caught from offending again. He also suggests that a non-apprehension policy may produce more theft in a store by lowering the morale of employees and stimulating some of them to theft.

Finally, he says that the decision whether to apprehend shoplifters must be weighed in the context of the store and its environment--size, location, volume of business, personnel, and most importantly, the percentage of shortage attributed to shoplifting. It may well be more cost effective for a small businessperson to ask shoplifters to leave than try to apprehend them.

On-the-spot warning for first offenders

A warning system for shoplifters was tried out in New South Wales and is now in operation in Victoria. For a first offence where the value of goods was less than $50, police issued a warning on the spot and the details were entered into the police computers. For theft ranging in value from $50 to $100 the offender could either receive an infringement notice of $100 or be charged; over $100, the offender would be charged. All subsequent offenders would be charged, regardless of the value of the goods stolen.

The objectives of the scheme were to reduce time spent by police processing first offenders for shopstealing; reduce the involvement of retail security staff following the detection of a first offender for shopstealing; increase the reporting rate of offenders detected to increase early identification of persistent offenders; ease the trauma of apprehension for some first offenders; and ward off criticism of police for introducing certain offenders to the criminal justice system.

According to a spokesman for the New South Wales Retail Traders' Association, only 7 per cent of people issued with the on-the-spot warning were caught re-offending.

Preventing retail crime in department and specialty stores

Because of the practice of displaying goods openly to attract consumers, department and specialty stores suffer a high incidence of theft, not only from customers, but from staff - some retailers put employee theft as high as 70 per cent of the total (Sydney Morning Herald 16 August 1990).

Theft prevention strategies range from electronic surveillance mechanisms, closed circuit television (CCTV), access control barriers, use of computers, staff training, increased management attention to the problem, changes in layout of the store, use of security consultants and 'honesty' shoppers to detect thieves, identification of much-stolen items with special stickers and signs, and better internal operations review and audit procedures.

Electronic article surveillance (EAS) systems

Electronic article surveillance (EAS) systems rely on a variety of electronic technologies. Several systems are available, most notably electromagnetic, low frequency and high frequency and all follow the same basic principles of operation.

  1. The EAS system creates one or more protective energy field(s) at a store exit.
  2. A detector or receiver filters out interference, as it scans the exit area for a particular type of signal-for example, a radio signal from a merchandise tag.
  3. The system sounds an alarm if the signal is detected within the field.

An EAS system based on dual high-frequency signals provides the sharpest, state-of-the-art performance for the retailer - broad, precise coverage, low false alarms, flexible installation and an aesthetically pleasing tag.

Electronic article surveillance is now common practice world-wide for clothing
Electronic article surveillance is now common practice world-wide for clothing

Design of appropriate tags has been a problem for EAS systems. At present, tags must be manually affixed and removed from garments or items. Ultimately, manual merchandise tagging will be eliminated, possibly by some type of 'gun' that will quickly and neatly affix tags to garments and other items. It is also possible that laser scanners will be used to deactivate tags while simultaneously totalling a shopper's purchases (Fancher 1984).

In the absence of EAS, chaining goods will cut down on theft
In the absence of EAS, chaining goods will cut down on theft

Case study: EAS in Wherehouse Entertainment home entertainment and informational software chain, California, United States

To combat theft of costly movies and compact disks, Wherehouse Entertainment used computer software, EAS and CCTV and redesigned their stores to facilitate surveillance by staff. As well, they set up a private investigative team to catch professional thieves and established Wherehouse University, a loss prevention training school.

Company policy was to make loss prevention as important as making sales. Listed are some of its loss prevention techniques.

  • Installation of over 300 EAS systems in their ground floor video stores. The EAS concept is a pass-around system, where the tag is never deactivated and stays alive. Each store has about five EAS systems-electromagnetic, microwave and voice-activated.
  • Formation of a shrinkage (inventory shortage) committee from a cross-section of the Organisation to share intelligence
  • Use of CCTV with monitors where customers could see them.
  • Installation of customer flow barricades.
  • Elevation of counters so clerks operating the terminals could view the store with ease and eventual redesign of the stores so the whole interior is visible from one location.
  • Establishment of a retail task force which set up surveillance on thieves' homes, followed them, collected data on their associates and business, set up a sting operation and notified the police. Many people were arrested and the company recovered hundreds of thousands of dollars worth of their own and competitors' products.
  • Use of computers to fight shrinkage.
  • Establishment of Wherehouse University, a classroom for training staff in loss prevention, with mock-ups of all company systems.
  • A system of rewards for individuals who contribute to the company's objectives (Gabbard, Mongang & Leonard 1986).

As well, the 83 top managers make a loss prevention checklist every Friday and visit 97 per cent of the company's stores. Those who perform appropriately are rewarded with an overseas trip.

Integrity or 'honesty' shopping

Acting as ordinary shoppers, trained integrity or honesty shoppers can provide valuable information about sales procedures and customer service and can give retail security managers an abundance of useful information at a reasonable price. The most effective integrity shopping programs are those designed specifically to elicit the information a company needs to make corporate decisions, and where those who receive that information know how to use it properly (Cowden 1987).

Because an honesty shopper can only concentrate on one or two concerns per visit, store managers must first decide what their priorities are - employee theft, adherence to store procedures, customer service, the look of the store, or physical security? Then the integrity shopper should be given a list of details to observe. Finally, the shopper should submit a written narrative-style report or fill out a form.

Using this report, the security manager can identify the store's strengths and weaknesses and implement corrective measures. Information from the reports may be passed on to departments, but the identities of integrity shoppers should be kept secret.

A well-conceived integrity shopping program will act both as a deterrent against employee theft and as positive reinforcement for conscientious work practices.

Using computers to reduce theft

Case Study: using computers and training to reduce employee theft at the Hudson department stores, Detroit, United States

The 1984 merger of Hudson's department stores in Detroit and the Dayton Hudson Corporation in Minneapolis was followed by a major inventory shortage or shrinkage. As well, the number of apprehensions of dishonest employees by the company had dropped from 473 in 1982 to 232 in 1983.

Hudson's responded by forming a task force which identified all possible causes of the shrinkage, and distributed a survey listing these factors to executives, sales managers and employees asking for comment: 43 per cent named inadequate theft-control programs as the primary cause of the rise in shrinkage.

As most retail theft originates at the point of sale, store management used this point to identify dishonest employees. A computerised charge credit analysis of three- and 12-month periods determined the number of transactions for employee charge accounts, and identified individual purchases, the credits and what the rate of return was for employees with accounts. This helped store management isolate rings of employees with high credits. Six or seven prosecutions for dishonesty recovered about $28,000.

Another computer report analysing third-party credits by account or terminal number showed incidents of employees ringing up credits to their own or family members' charge accounts. Another tool was a terminal control report coupled with a terminal detail report. The company also instituted daily and weekly void and no-sale reports to identify repeated unusual transactions by particular clerks.

To catch more internal thieves, the company improved investigations, interviewing, and interrogation training for loss prevention investigators. After training improvements had been implemented and computerised detection methods instituted, the apprehension rate for employees rose to 476 in 1984 and again to 800 in 1985.

Setting up a task to identify all possible factors contributing to shrinkage, surveying employees, analysing the results and using computers enabled Hudson's to save $5 million in a year.

Hudson's management believes its employee theft program worked because the shortage task force tapped into the knowledge of the company's executives, managers and sales staff and responded to their most pressing concerns.

The need for individual analysis

The Selfridges study below shows that global anti-theft measures should not be adopted, but that each department, boutique or shop should be treated as a separate case for the purpose of analysis and design of prevention measures.

Case study: controlling shoplifting in Selfridges Oxford Street department store, London, United Kingdom

Selfridges is one of the largest department stores in the world, with retailing on seven floors and 380 different shops within the one store. Several of these shops have some degree of autonomy, being staffed or stocked by independent concessionaires.

The security department has responsibility for all security arrangements within the store, providing a general cover in the form of electronic surveillance, a team of store detectives and a small number of uniformed security staff. As well as theft by shoppers, their responsibilities cover dishonest staff, terrorist threats, general protection of staff, policing of delivery and storage areas and even lost property.

Selfridges' CCTV system is the largest of its kind in the UK, with about 90 cameras, eight of which monitor external areas and operate as a general theft deterrent. Electronic tagging of merchandise was rejected because of the expense, the large number of entrances and the sheer size of the crowds.

Instead of introducing heavier levels of security to the whole store, Selfridges adopted a more flexible, local approach, monitoring individual departments for losses and introducing appropriate security measures.

One approach was to adopt more traditional methods of sale, for example selling shoes in the old-fashioned manner with personal fittings. Clothing chains were introduced, with chains long enough to allow customers to remove a garment and inspect it, but not try it on without assistance. Special lightweight chains were devised for delicate garments. One chaining system was abandoned as, unless deactivated by staff, it would set off the alarm - upsetting innocent customers and threatening sales - when garments were removed.

Effectiveness: In 1986 Poyner and Webb (1987) evaluated the effectiveness of some of these local security measures using known losses from 1982, 1983 and 1985.

They found that increased management concern for security in the swimwear department - in 1983 a new buyer arrived and introduced a more rigorous regime of stock counting produced a drop in losses from almost 7 per cent to between 1 and 2 per cent. As costumes were displayed on racks with no security devices, the security department concluded that the improvement was mainly due to better staff supervision of stock.

In Reldan, a specialty store, layout was changed and staff numbers increased to improve supervision of stock. The original layout had made it difficult for one sales representative to supervise stock, as well as the fitting rooms and cash point which were some distance away in an adjacent department.

As well, a new buyer introduced better staffing arrangements and supervision of staff in 1983, and losses fell for six months. But when the department was moved and stock increased, losses began to increase again. In December 1985 the department was enlarged and moved into a more central position with staff increased and better supervised. Losses fell again, even though the department was carrying much larger quantities of merchandise.

After a rise in losses coinciding with the opening of Escada, an up-market fashion range normally displayed against one wall of the fashion floor, clothes were chained on free-standing racks and fitting room procedures were tightened. Losses were almost eliminated for three years.

Lighter security chains were eventually introduced to prevent marking of delicate fabrics. Chains do not appear to discourage customers from examining clothes: in fact, with more up-market items, security devices appear to enhance the perceived value of the goods. Experience in the dress department of Selfridges also suggests that chains protect stock even when they are not properly locked.


The Selfridges study demonstrates that conventional security measures such as closed circuit television surveillance and store detectives are not sufficient to prevent shoplifting, but that local security devices, staff supervision, management concern and the physical layout of the store can contribute to a reduction in theft. It also shows how the combination of these security measures can lead to a satisfactory compromise between open merchandising and theft reduction.

Identifying shoplifters' targets

In the following study, shoplifting was reduced by the use of specific signs and stars identifying frequently-shoplifted goods.

Case study: reducing shoplifting by the use of specific signs in Uppsala, Sweden

The object of this study (Carter et al. 1979) was to extend an earlier study (McNees et al. 1976) - showing that signs and stars identifying clothing as frequently taken by shoplifters reduced theft - to other items and see if price and size of the item affected the outcome.

The Uppsala study showed gross sales for the store for 1976 were approximately $21 million, with disappearances costing $411,600 or 1.96 per cent of sales.

Except for an exit guarded by a uniformed guard, shoppers had to pass one of 25 cash registers in the front of the store to get out. At the start of the five-week study the store employed 60 full-time cashiers. During the study 15 part-timers were employed, and by the end of the study the store employed a total of 120 people.

The initial choices for identification as frequently-stolen items were flavoured lip gloss, Elvis Presley records, leather coats and small, adjustable wrenches, which were subsequently dropped from the study and replaced by halogen lights.

Identification marks: Before the study, each of the items was marked with a small red adhesive dot (circa 1 cm in diameter). It was placed on the screw-off cap of the lip gloss and on the price tag of the other items. Cashiers were shown samples of the marked items and instructed to tick a measurement sheet whenever somebody bought one of the marked items. These sheets were returned to the supervisor at the close of the day and a new one issued next morning.

To determine the number of missing items, an observer made inventory checks in the store each morning before opening. All marked merchandise was counted and recorded. Using the cashiers' forms, the number of missing items was calculated. The number of items on the shelf became the starting point for the new day. On 30 per cent of the days a second recorder made independent counts, and on half the days three observers counted the shelf items. An observer also 'bought' coded lip gloss to see if the cashiers were marking the forms.

Warning signs: Following one week of baseline measurement, three signs (17.5 x 27.5 cm) were placed on the cosmetic displays near the entrance to two checkout lanes, and one on a rack near the cash registers. The signs read:


Three red circles approx. 12.5 cm in diameter were taped to the display directly above and behind the target merchandise.

Prior to observation day 15, two signs and four circles were placed on clothing racks containing leather coats, and three signs and three circles near the Elvis Presley records. From observation day 15 to day 21, baseline data were recorded for halogen bulbs, and prior to opening on day 22, three signs and two circles were placed near them. The signs were up for 27 days for lip gloss, 20 for records and leather coats, and 13 for bulbs.

Effectiveness: The number of missing items in all target categories was reduced when the merchandise was specified as being frequently taken by shoplifters, while sales showed moderate to marked increases.

The number of missing lip glosses fell from 18 per cent to 9 per cent; missing Elvis Presley records fell from 9 per cent to 3 per cent; disappearances of leather coats fell from 18 per cent to zero, and the loss of halogen bulbs was reduced from 31 per cent to 10 per cent.

This reduction occurred in conjunction with the intervention and remained below baseline levels for the duration of the study.

Employing outside consultants

Some stores have found it profitable to bring in outside security experts to solve their shrinkage problems.

Case study: employing consultants to reduce shrinkage in Bermans specialty stores, United States

To deal with internal shrinkage, Bermans, a specialty retail chain with stores in 30 states, reduced stock shrinkage in two ways: consultants were hired to raise awareness of staff from selected stores about loss prevention; and investigators were sent in to apprehend staff suspected of stealing. Experienced in investigations, the consultants collected evidence on staff suspected of stealing so they could be prosecuted.

An initial awareness-raising meeting, followed by monthly visits to stores by the consultant, reduced shrinkage by 40 per cent in the first six months at a cost of only 5 per cent of the savings in shrinkage (Gabbard, Montang & Leonard 1986).

As well, undercover investigators were infiltrated into two high-shrinkage stores. This cost $4,500 but uncovered six employees stealing - all but two of the staff in one store. The saving from the highest high-shrinkage store was 33 per cent.

Crime prevention through environmental design (CPTED)

While some CPTED strategies will work in most cases, the key to successful programs is a careful analysis of the specific circumstances and the development of site-specific programs.

Case study: reducing robberies in convenience stores in Tallahassee, Florida, United States with CPTED strategies

Between 1981 and 1985, Jeffery, Hunter and Griswold (1987) tested the influence of internal and external environmental factors on the rate of robberies in 34 convenience stores in Tallahassee. Basing their analysis on the 'opportunity' theory of crime prevention-which maintains that the physical characteristics of a location either present an opportunity to potential criminals or deter them-they analysed individual crime sites and recommended physical changes.

Jeffery and his colleagues found that you cannot judge where crimes will occur just by general location: it does not follow that a particular store will suffer a high rate of robbery simply because it is in a high-crime area. Individual crime site data and analysis are needed to determine how secure a particular store will be.

Their findings were as follows.

Location of cashier: Stores with the cashier located in the centre were robbed less often than were stores with the cashier on the side.

Number of clerks: Stores with more than one clerk were less likely to be robbed than were stores with a solitary clerk.

Visibility within. Stores with unobstructed views within were less likely to be robbed.

Visibility outside. Stores with unobstructed windows and shelving that permit clear viewing of the interior of the store were less likely to be robbed.

Land use. Stores located next to commercial property were less likely to be robbed than were stores near residential property, and these in turn were less likely to be robbed than were stores near vacant lots or wooded areas.

Access to store. Stores with concealed access and escape were more likely to be robbed.

Exterior lighting. Stores with well-lit exteriors were less likely to be robbed.

Evening commercial activity. Stores near areas with evening commercial activity were less likely to be robbed.

Petrol pumps. Stores with gasoline pumps in front were less likely to be robbed than those without.

Cash handling. Stores with good cash handling procedures - and with signs letting shoppers know this - and safes clearly visible were less likely to be robbed. The authors found that '...convenience store robberies are very responsive to both internal and external physical and geographical features which involve the design of the store and the design of the external environment'(Jeffery et al. 1987, p.69). These findings were used to justify an ordinance restricting convenience store operations in Gainesville, Florida, and served as a partial basis for a later state-wide analysis of convenience store robbery (Hunter 1988).

Hunter (1990) re-examined the Tallahassee stores four and a half years later to determine what changes might have occurred. He found a general decline in robberies of 24 per cent from June 1985 through December 1989, with some store robberies decreasing by as much as 86 per cent, while other stores increased by up to 50 per cent.

Both the 1985 and 1989 data demonstrated that crime prevention through environmental design (CPTED) works, but that the influence of environmental factors varies over time.

This means that crime prevention strategies must constantly be upgraded and improved.

In 1988 Hunter and Jeffery undertook a Florida-wide survey of convenience store robberies to test the application of CPTED principles from a local area to a state-wide area. They found that the model had greater applicability at the district level than at the state level (Hunter & Jeffery 1991).

Enhancing accountability and staff awareness

In its survey of business crime prevention initiatives, the UK Home Office (Burrows 1991) found that increased shrinkage losses and recessionary pressures had caused a reassessment of operating cultures, with managerial accountability displacing the entrepreneurial sales orientation of the recent past.

Case study: educating branch staff and developing accountability of individual branch managers at British retailing chain B and Q, United Kingdom

Despite increasing profitability throughout the late eighties, B and Q, an English do-it-yourself retailing chain, found stock losses had risen to an unacceptable level by late 1991.

The company set up a top-level working party representing all the main company functions to formulate a loss-prevention strategy. The working party developed a 95-point action plan and devolved its implementation, and introduced a three-pronged program for educating branch staff and inculcating accountability in branch managers.

Storewatch: An intensive training program for managers and their two deputies was mounted. Over 1100 staff attended sessions which used sophisticated audience-response devices to guarantee participation. Management were set realisable targets for their stores and given training material to help get the message to their staff.

Management 'hit' teams were sent into the worst 25 stores in the chain. Headed by a district manager from another region, these teams of six or seven (audit, security, personnel and training) did intensive week-long investigations, then presented an action plan to the Operations Director.

Audit and security were intensified in the worst regions, reversing a company trend. A regional auditor and security manager were appointed to arrive at a program with the regional management team which targeted stores with the greatest potential payback.

The cost was modest, comprising training material and equipment, hotel accommodation for the hit squad and marginal increases in audit and security staff.

Evaluation: The overall effect of this package of measures in their first full year (February 1990 - February 1991) was to reduce B and Q's stock losses by 25 per cent. The original investment was returned twentyfold in the first year.

Internal operational reviews and audits

Many small businesses could be wasting time and money on security programs because they have mistaken the causes of their shrinkage problem (Moberly 1985). According to Moberly, the following steps are necessary to determine the cause of shrinkage:

  1. Identify all operations within the firm that could conceivably affect inventory loss-for example merchandise, shipping, shoplifting, receiving, employee theft, storage, movement of merchandise and accounting.
  2. Rank these operations, in descending order, according to proportion of shrinkage assumed to be attributable to each.
  3. Moberly suggests taking the first list and turning it upside down to gain a new perspective and perhaps a more accurate picture of inventory flow. Occasionally examination of seemingly insignificant operations reveals practices that require immediate attention.
  4. Develop an operational checklist similar to a work simplification/methods improvement process chart (a means of analysing the details of a job operation). This checklist can be used to describe and record each part (who, what, when, where, why, how and how long) of each operation in detailed sequence. Draw upon the experience and knowledge of employees here.
  5. Describe the operations to be examined using work simplification/methods improvement by reducing them to some combination of the following five steps.
Operation 0 Doing something to the merchandise
Transportation T Moving the merchandise
Delay D Any action that causes the movement of merchandise to stop or be delayed
Storage S A normal part of the process that requires storing merchandise to prevent unauthorised use
Inspection I Any point where an inspection of the merchandise occurs

These steps can be arranged into a flow diagram, like the simplified inventory handling example below:

s =Receiving and storing merchandise at warehouse
D =Merchandise lies idle in warehouse/storage area
T =Transferring merchandise to selling point/floor
O =Taking merchandise from storage cartons and presenting for sale
T =Placing merchandise on sales floor
O =Pricing merchandise

The flow diagram for this particular operation may appear as S D T 0 T 0. To be effective, an actual diagram would be much more detailed, noting the person, location, time and manner in which each operation was accomplished.

Besides complementing existing procedural review methods, diagrams depicting the flow of merchandise from receipt to point of sale are important tools for:

  • scrutinising specific procedures within an operation;
  • examining interdepartmental relationships;
  • identifying inefficiencies and errors;
  • comparing existing merchandise-handling practices with company policy;
  • highlighting operational security weaknesses.

For example, the S D T 0 T 0 flow chart illustrated above shows that merchandise was at no stage subjected to inspection for quantity, defects, loss or damage. Further analysis would show who could exploit this vulnerability and how, where and when.

To determine where inspection points should be located, this firm could review previous loss reports and then apply the work simplification concept to the operational flow chart, asking the following questions:

  • What type of illegitimate act/s could occur to the merchandise in this operation that would result in a loss?
  • How could those illegitimate acts be performed?
  • When?
  • By whom?
  • Where?

Ultimately, however, the effectiveness of the initiative depends largely on these factors: the accurate selection of the operations to be examined; the thoroughness of those examining them; and their ability to recognise points of vulnerability and the ability to secure managerial support for corrective measures.

Preventing fraudulent refunding

Fraudulent refunding involves thieves returning stolen goods to retailers and getting a full refund (Clifford 1988). It can be dealt with in a number of ways:

  • enforcing a rule of 'no original receipt, no refund';
  • using a phone alert system to other stores to warn them of fraudulent refunders;
  • refunding on goods above a certain amount by cheque through the mail from the store's head office;
  • requiring management approval on all refunds without a original sales slip;
  • keeping a file of all refunds made without a sales slip so they can be reviewed for names, addresses and phone numbers.

To prevent people paying with bad cheques, some retailers code register receipts to show that the item has been paid for by cheque, and refuse to refund the money until the original cheque has been cleared.

Preventing retail crime in supermarkets

The major crime problems affecting supermarkets are shoplifting and the theft of shopping trolleys. In the United States, robberies of supermarkets are increasing, and demonstrations of consumers against certain products are causing problems for management. Occasionally, supermarket chains are targets of extortionists who tamper with goods or food - for example, the Tylenol case in the US and a recent Australian case where criminals contaminated toothpaste and mouthwash with arsenic.

A 1990 survey by the American Food Marketing Institute (FMI) showed an average of 62 apprehensions per store for shoplifting from the 41 supermarket companies who responded (FMI March 199 1). The average value of each item stolen by the 250,000 shoplifters was nearly US$18, and the companies recovered more than US$4.5 million worth of merchandise.

Both in the United States and Australia, shoplifters' favourite targets are cigarettes (60 per cent), health and beauty items (17 per cent) and meat products (14.3 per cent). In some states in the US, alcohol is sold in supermarkets and is popular with thieves.

In the five-year period 1985-1989, shoplifting arrests in the US increased 30 per cent, but fewer than 35 per cent of the people apprehended for shoplifting were arrested (FMI February 1991). The arrest rate has not changed over the past 10 years.

EAS in supermarkets

Electronic article surveillance (EAS) systems rely on a variety of electronic technologies. Several systems are available, most notably electromagnetic, low frequency and high frequency.

Supermarket chains began to install EAS systems in the US in the early 1980s (Ohlhausen 1987).

Typically, EAS users tag only a small percentage - 2-3 per cent - of supermarket items, such as the most stolen items mentioned above. The tags can be disguised as bar codes or otherwise hidden.


Some supermarkets install sensors at each checkout aisle. After groceries are rung up, the customer walks between two arched steel bars, and any tagged items hidden on the person will cause an alarm to sound. The cashier can then ask the customer to step back and walk through again, and suggest that the person has forgotten something he or she intended to pay for.

Other supermarket operators put EAS sensors at the store's exit. This is obviously cheaper than placing them in each aisle, and does not require each checkout to be rewired. Most importantly, cashiers do not have to be retrained and are not expected to handle shoplifter problems - a security officer at the store's exit makes sure shoppers walk through the scanner and responds to alarms.

Closed circuit television (CCTV)

Closed circuit television is in wide use as a management tool and a deterrent to crime. One of the most recent innovations in the technology is systems which trigger only when activated by alarm sensors or other signals.

Case study: use of CCTV at Tesco Stores Ltd, United Kingdom

One of England's largest retailers, Tesco, is vulnerable to crime such as attacks on staff in the course of robbery, shoplifting and internal theft. Disillusioned with the piecemeal security arrangements for their supermarkets, particularly their larger superstores, and concerned about the cost of store detectives, Tesco has begun installing TISS - the Totally Integrated Security System.

Over recent years a number of new and existing Tesco stores have been fitted with this internally-developed security package, the TISS program. TISS incorporates changes in store design and procedures, but its central component is centralised CCTV monitoring of all vulnerable areas inside and outside the store.

Notices to customers are backed up by closed circuit television in many supermarkets

Cite article

Geason S & Wilson P 1990. Preventing retail crime. Crime prevention series. Canberra: Australian Institute of Criminology. https://aic.gov.au/publications/crimprev/retail