Shoplifting on the rise: A sign of recovery?

June 24, 2011: 3:47 PM ET
Shoplifting on the rise: A sign of recovery?

NEW YORK (CNNMoney) -- That latest sign of an economic recovery: shoplifting is back.

Typically, an increase in shoplifting is believed to be an indicator of tough economic times. But a recent study by the National Retail Federation, which found that retail theft by employees is on the rise, says the recent spike in stealing could very well mean the economy is on the upswing.

According to the National Retail Federation's security survey, inventory shrinkage -- which is the retail value of lost merchandise -- cost retailers more than $37 billion in 2010, up from $33.5 billion in 2009.

The losses were largely due to employee theft, the survey said, followed by shoplifting by customers, administrative error and vendor fraud. The survey polls roughly 140 retailers year after year.

"A lot of times shoplifting is an inside job," said Jim Angel, associate professor of finance at the McDonough School of Business at Georgetown University.

When the economy hit its lowest point, employees were primarily consumed with keeping their jobs, said Richard Hollinger, a criminology professor at the University of Florida and author of the security survey.

Workers were deterred from stealing simply because even minimum-wage jobs in retail were scarce. "They were so worried about their future, their families and paying the mortgage, they realized this is what is keeping their family afloat," Hollinger said.

Shoplifting rates fell significantly in 2007. But as the recovery takes hold, shoplifting rates are on the rise again.

As employees feel more secure in their positions, they may be more inclined to take some risks, Angel said.

At the same time, employers drastically reduced head counts during the recession, which left fewer employees on the floor with heavier workloads in the early stages of the recovery. As workers feel more disgruntled, theft becomes "very tempting," Hollinger said, "especially if they feel that the company can afford it and they're being paid minimum wage."

"When those inequities build up, rationalizing theft is fairly common," he said.

"Employee theft is something every retailer faces, and we are no different," said Tina Sellers, the vice president of Loss Prevention at video game retailer GameStop, a company that has been particularly vocal about the problem of shoplifting.

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Inventory losses at retailers reached it's highest point in 1994 when the U.S. economy was growing at a very fast pace and has steadily declined since -- until the uptick last year, according to the National Retail Federation's data.

Other factors contributing to the decline in shoplifting in previous years have been improved security measures and the demise of CDs and DVDs, which once drove stealing to new heights.

Now that most music and movies are primarily downloaded, the resale market for those items has largely dried up, Hollinger said. To top of page

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