“The rise of shrinkage”

Expert Eye with

John Shepherd

Owner and Managing Director of Partridges

• Is our café a hero or a villain?
• “The battle for optimism and morale in retail”
• “Sustainable confusion”
• “What to do about January?”
• “Is the Christmas boom sustainable?”

When times are tough for shopkeepers, several aspects of running a business take on a greater significance. Take shrinkage for example.

Shrinkage is a polite word for loss of stock and hence profit. It can be caused by factors like wastage, administrative errors or shoplifting. Shoplifting is itself a polite word for theft and theft is like rain – constantly ever-present but if ignored can ruin the roof.

For management and staff it is a depressing daily reality. One thing I envy about our Saturday market traders is that losses from theft are virtually negligible from a market stall – although they have plenty of other things to worry about. It is difficult to estimate but for us losses of up to 5% of sales, at least, could be the reality. Perhaps more. By some estimates the problem doubled in the UK over the past 12 months with 200 thefts being reported an hour to police. In convenience stores alone theft amounts to nearly £200m per year, which is about 7p on every transaction. Across the board it is around £12m a day. The figures are truly staggering.

In our case, newspapers a few customers clearly believe to be an aspect of the National Health Service – free at the point of delivery. Then, of course, there are those “unknown knowns” which we discover at the end of the quarter results. Perhaps 80% of all theft falls into this category.

Shoplifters come in all shapes and sizes but it appears to us that a motivating factor for stealing speciality foods is not economic need. A glance at the items that are stolen would indicate this. Of course anyone reduced to stealing could be considered not in a happy place, and many psychological theories have been put forward, especially when a celebrity is involved. However, overall it seems that shoplifters themselves genuinely regard it as a victimless crime. It does not occur to them that jobs may be at stake, prices may go up and hostile environments created. Indeed some shops have been known to shut down because of it.

It is a problem that is by no means easy to tackle. We are lucky to have among our staff a redoubtable security officer who regards theft as a personal insult and apprehends shoplifters on a daily basis. It is not an easy job. Some shoplifters become threatening, some return the next day to continue unabashed and some are in total denial that they are doing anything wrong.

I remember one memorable incident when the shoplifter put forward the defence of being a member of a Gentleman’s club and did not need to steal. Which was ironic as he had just completed the act of theft. Then there is the alarming prospect that we might get it wrong and misread an incident. We have to be extremely careful to carry out procedures scrupulously otherwise the result could be, at best, a letter of apology to the customer or, at worst, a quick email to our lawyers.

The stakes are high and in the past a security officer from a nearby establishment has asked us to detain a shoplifter as his own guidelines prohibited him from doing so. In addition, police resources are severely stretched at present, meaning that unless violence is involved or the amount of stock is extremely large they are reluctant to attend.

Despite the depressing realities of theft, as always, when being a shopkeeper, it is important to keep a balanced view. Speciality food retailing has many positives. There is a big picture that cannot be stolen from us. To run a food shop to be proud of and one that offers a real alternative to other retailers and hence provides a service to the local community is a noble goal.

To deal with shoplifting we must be vigilant and we must be proactive but we must never get depressed. Life (and the shop lease) is too short for that.