Title says it all 
Well, there’s this related article from CNN today :
I read somewhere that 5-10% shrinkage, either due to employee or customer theft, is typical in many US retail stores. Not sure about grocery stores in particular, or how much of a financial impact it has on them.
Remember that stores wouldn’t necessarily lower prices as a result of reduced shrinkage. They could simply increase their overall profit margins.
Since Property is Theft, when we eliminate all theft, all groceries will be free (as would all other necessities) in the Socialist paradise.
That’s short-term thinking. Grocery stores compete fiercely over price and run quite thin margins. While a no-theft world might leave them some time to enjoy their increased profits, it wouldn’t take long for someone to undercut them. Even if the theft problem was solved by only a single grocery chain, my guess is they’d quickly use that advantage to lower prices and undercut the others.
I worked at a large chain for a few years. The losses due to theft are minimal when compared to losses due to spoiled, damaged, and expired goods. The profit margins were so thin that heads would roll everytime large amounts of product had to be thrown out.
As a result, I don’t envy meat, bakery, or produce managers, their stress levels are extremely high.
Bingo. Every now and then someone will make off with a few items here or there, but the most-stolen items (batteries, razor refills) are tagged and watched very closely, and only very rarely did anyone manage to not get caught trying to steal that stuff.
What kills is when the refrigerated cases die at 8PM and repairs can’t be made until the morning, or the freezer compressor dies and you have to toss out $100,000 worth of ice cream, or the idiots at the warehouse loaded one of your pallets with jars of pickles and other glass-packaged items on top of boxes of paper towels and then not only did it fall over in the truck but in the process knocked over all of your other pallets in the truck dominoes-style and your stockers spent all night cleaning up the mess and only managed to salvage 1/3 of the product and of course the warehouse only gives you 50% credit on damaged and expired items…
Whew! I do not miss that job at all.
As the others have mentioned, even 5% theft loss in a grocery store is pretty hard to imagine. That would mean for every 19 cans of tuna fish bought, one is stolen. Maybe just barely possible in a small corner store in a really bad neighborhood, with a not-too-alert proprietor, but not a supermarket anywhere.
Now, 5% overall shrink is totally believeable. Shrink is pretty much the difference between total sales and the retail price of everything you thought you brought in the back door. So anything that changes the sales total is shrink. Dropped cases of glass jars, spoiled produce, past-date chicken, 32 ounce bottles of olive oil accidentally priced as 16 ounce bottles, customers returning an open package, warehouse left a case out of your wholesale delivery and your receiving guy didn’t notice, the dead-compressor ice-cream writedown is of course a classic, etc., etc.
I will say the grocery business is different from most other retail: grocery stores sell food at really close to their wholesale cost (typical net profit on an item is 1% or less), but they turn their whole inventory over 10 or 20 times a year, and items are generally inexpensive compared to other retail. So I wouldn’t be surprised if theft at other stores is a very different pattern than at grocery stores.
If there was no theft, as in none whatsoever, stores would save more than the value of the stolen merchandise. A world without theft would require no security devices, lower insurance premiums, no paid staff time devoted to applying or checking security devices or to inventorying stock to check and adjust for losses. There are many, many expenses related to theft prevention that are ultimately passed on to consumers.
and
While I’m certain that DrFidelius was trying to be ironic, both of these quotes illustrate the fallacy in thinking that property theft (and an economy in general) is a perfect, zero-sum game.
There’s a story on the BBC here that says shoplifting adds £180/year to an average family’s shopping bill.
Actually, the title DOESN’T say it all, because there are different types of theft, and stores have different responses to crime.
In SOME places, stores just accept a certain amount of shoplifting and add the costs to their prices.
But in other places? Well, you’ll find that in MANY inner city neighborhoods, there are no supermarkets. That’s because supermarket chains have small profit margins, and prefer not to operate i neighborhoods where high crime leads to higher insurance costs and lower profit margins.
The result: poor people in bad neighborhoods have to shop at small bodegas or mini-marts where the price of food is MUCH higher than at a Safeway.
In THAT sense, crime and theft can end up costing poor people a LOT of money in higher food prices.
I wonder how much money is lost from idiots deciding they don’t want the ground beef they picked up earlier, and leave it on a shelf next to the Lucky Charms.
See, this is the thinking when you don’t understand capitalism and free enterprise.
By this logic, grocery stores can simply tack on whatever profit margin they want. Make it 100%…500%…whatever Big Business decides to make. Apparently there is no value whatsoever in producers lowering their costs? All costs plus a freely-assigned profit margin, are passed along to the hapless consumer?
The correct answer to what you can charge if you want to sell something is related to what the next guy over is charging for a similar product and service. One doesn’t get to “simply increase their overall profit margins” just because one drives out cost. The next guy over is also driving down his cost of production and delivery.
A lot of the added cost of theft comes from additional security and inventory procedures. So add the cost of security personnel, video cameras and monitors, security tags and deactivators, theft sensors, additional packaging, etc. There is also an increase in taxes from the arrest and prosecution of theives.
In the world where there is no theft, there would be no need for check out people either. Customers would just leave the money on the counter on the way out the door.
I’d guess that businesses try not to spend more on security than the loss that would result without it, but that is probably difficult to compute precisely. For example, security personnel are also on the look out for injury scams, tylenol poisoners, and other insane customers or employees. There is also an emotional component involved, people don’t like to have things stolen from them. Businesses may spend more on theft prevention than it saves simply to avoid the annoyance of theft.
How does this compare with the assertion by Freegans that massive amounts of perfectly good food is being thrown out by grocery stores every day?
Not that I’m a freegan, but damaged and expired goods are generally perfectly good, but unsellable. I’m still not jumping in a dumpster, though.
I’d imagine that the Freegans define “perfectly good” differently than supermarket managers do. I recall a former roommate who would sometimes hit up the dumpster at the local Trader Joe’s. The stuff I’d see in the fridge wasn’t generally stuff that I’d have paid money for.
I guess it depends on what you would consider “perfectly good food”. Obviously it’s not perfect or good enough to sell but it may be edible. At some point, the food is deemed unfit to be sold to the public, whether it is spoiled, damaged, expired or a violation of health regulations.
An expired box of KD is probably fine, other things …who knows.
Back in the 80’s we would donate alot of food to the food bank but some regulations changed and everything had to go into the garbage compactor.
The problem with being a Freegan is… you don’t know why the food has been put into the dumpster. It’s like playing Russian Roulette! Anyone who’s had a serious case of food poisoning will tell you, it’s not worth it.
Or worse, would you really want to eat something that was thrown out due to cockroach, rat or mice infestation? These are common in any grocery store along with various other pests… Not to mention, food that may have been exposed to the chemical used to control or erradicate them?
I used to work in a grocery store and our inventory shrink ran about 2%. I was told this was pretty average for the industry (in the US). Part of my job was to sort the damages (product that was damaged, outdated, etc). I’d say that about 25% of what I sorted was due to theft - when they left the packaging. Of course there was no trace left of everything else that was stolen.
BTW, the cameras in the back room were a lot better than the ones on the sales floor.
Then there are the preventative measures stores take. Loss prevention departments, security cameras, security tags for market items, tags for pharmacy, theft detectors at the door, training, etc. Plus whenever an “incident” occurred and we caught a shoplifter there would be the labor time the manager spent dealing with the police and writing paperwork. Equipment costs can be amortized and are negligible in the long run. So the real costs here are probably in the labor for security personnel, main office loss prevention staff, legal, etc…
So there are a lot of numbers here… and I don’t have any hard data for the upper level stuff. Given what I know about the grocery business I would say that around 1% of your grocery bill is attributable to theft alone.