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As retailers innovate, grow, so do shoplifters

As retailers innovate, grow, so do shoplifters
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First Published: Mon, Sep 10 2007. 01 17 AM IST

On Alert: Big Bazaar Staffers
On Alert: Big Bazaar Staffers
Updated: Mon, Sep 10 2007. 01 17 AM IST
New Delhi: On a busy weekend afternoon at the Big Bazaar hypermarket in New Delhi’s suburb of Noida, a thirty-something woman attracted the staff’s attention because of her wobbly walk.
When they intercepted her and conducted a search, they found nearly two dozen bottles of shampoo, nearly a dozen bottles of hair oil, shaving cream tubes, packets of sanitary napkins, even papad packets and several other stolen goods stashed in cleverly stitched pockets in her petticoat. The total value of stolen items: a cool Rs8,400.
On Alert: Big Bazaar Staffers
India’s small but growing organized retail business isn’t just changing the way people shop; it is also altering the way they steal.
Earlier this year, when a cashier at Big Bazaar’s Noida outlet scanned a Sherwani (a formal suit for men) worth Rs2,099, it just rang up Rs299. The alert sales clerk was surprised but the buyer, a young call centre executive, protested, saying he was not to blame if something had gone wrong with the price tag and barcode. Store officials soon figured out that the executive had switched the barcode of the Sherwani with another product priced Rs299; they found the original barcode, which had been removed, from the executive’s pocket.
At the chain’s Inderlok store, the staff encountered a woman who was actually carrying a stapler in her handbag with which she could staple price tags showing lower prices on expensive garments.
From swapping barcodes to wearing stolen clothes underneath shirts or jackets, shoplifting is on the rise in India. The cost per theft ranges from a few hundred rupees to a few thousand rupees. That isn’t much, but it still hurts profitability in a business where profit margins are paper-thin and usually in single digits.
Retail crime is a global phenomenon and companies lose billions of dollars each year to pilferage and theft. Retail theft and pilferage in the US went up to $37 billion in 2005, up from $31 billion in 2003, according to a study by the University of Florida.
Modern retailers insist the pilferage rate in India is lower than the global average of around 1.5% of total sales, a figure disputed by consultants that follow the sector and even by anti-pilferage officers at some stores, who say it is as high as 3%. And the lifters are increasingly having it easy.
At millions of small stores across the country, sales representatives hand over whatever the customer asks for; customers rarely have the choice of picking merchandise off the shelf themselves. Few traditional stores have barcodes, RFID (radio frequency ID) tags, or closed-circuit cameras; the watchful eyes of sales staff is their only protection against shoplifters—these and the fact that the merchandise is usually out of reach.
That has changed as hundreds of modern retail stores have sprung up in various Indian cities in recent years with broad aisles and more varieties of goods spread around thousands of square feet of shopping space in an effort to provide more convenience to consumers. These stores also provide bigger hunting grounds for shoplifters.
“Retailers are always in a bind as they try to give the customers greater access to the merchandise and greater access to merchandise also means a certain amount of risk,” said R. Subramanian, managing director, Subhiksha Trading Services Ltd . “And all the items are not necessarily sort of easy to track... There is a bit of pain there.”
Subramanian said shrinkage ratio, or the loss due to theft and pilferage, for his company is “very low” as it hires more manpower to check theft. Stores such as Reliance Retail, Shopper’s Stop and Landmark declined to allow their staff to participate in the interviews for this story.
According to a 2006 report by audit and consulting firm Ernst & Young, Indian retailers lose up to Rs600 crore annually to theft and pilferage.
“There may be a danger that the dash for growth (of modern retail in India) may generate excessive shrinkage and crime and that management controls could become lax without a tough-minded approach,” warns a recent report by UK-based Centre for Retail Research that this year included India in its annual Global Retail Theft Barometer.
Retailers are doing their bit to stem the loss by using a combination of anti-theft measures, including closed-circuit cameras, RFID tags, and less sophisticated methods such as detectives posing as customers. At Noida’s Big Bazaar store, half-a-dozen plainclothed guards roam the aisles on busy weekends, conducting mock purchases during rush hour while keeping a watchful eye on the real shoppers. They even pay for their merchandise to avoid any suspicion. It is later refunded.
Trial rooms at some stores are now manned by guards who track each garment customers take in for a try-out. And almost all modern retail stores bar consumers from carrying large bags or previously purchased goods inside.
Staff at Noida’s Big Bazaar has caught, on average, five shoplifters every week since it started operations earlier this year. In most cases, the shoplifters are set free after taking their pictures, calling their relatives and warning them not to enter the store again.
Kapil Sarna is one such lifter. The Class XI student in a Noida school was nabbed by a security guard after the boy tried to walk off wearing a stolen T-shirt underneath his cream-colour shirt. The store manager summoned the 17-year-old student’s brother-in-law and let the boy go after issuing him a warning.
“He is young so you can teach him the right path,” Sanjay Mishra, the head of the store’s 10-member loss prevention team advised the student’s brother-in-law, who nodded without saying anything. The relative also paid up Rs279, the price of the stolen olive-green T-shirt. Store managers claim organized shoplifting rings operate in many areas and that they sell their loot to smaller retailers.
But is not just shoppers who are causing concern.
Managers say pilferage by store staff is another problem. Pantaloon Retail (India) Ltd, owner of the Big Bazaar chain, gives discounts to store staff in an effort to make them pay for what they eat or drink in the store. The store’s security guards also scan empty boxes going out of the store to ensure that they are actually empty.
Often, retailers find empty wrappers of chocolates and chips in the aisles—a grim reminder of surreptitious unpaid consumption by staff and customers alike.
However, despite such measures, Ernst & Young says India’s pilferage level is above the global average at 2% of the total turnover.
The firm warns that the figure could go up as modern retailers grow their share from the current 3% of India’s $300 billion (Rs12 trillion) annual retail market to 20% in the next eight years. Its report says, “fraud is going to be one of the retail sector’s primary challenge in future.”
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First Published: Mon, Sep 10 2007. 01 17 AM IST