A Kitchener grocery store is checking receipts, part of a multibillion dollar theft story in Canada

Written on a whiteboard with purple and pink marker, the sign read: “Please be prepared to show your receipt upon exiting to validate and maintain inventory accuracy. Thank you.”

It’s not an isolated incident, Loblaws said, and stores across the chain are implementing the new security step.

“The practice of checking receipts is not unusual throughout the retail industry,” a Loblaws spokesperson said in a statement. “These signs were put up by a number of stores to let customers know about a change in practice at the location.”

Down the street at a Kitchener Walmart, the retailer has created a store within a store for selling beauty and cosmetics products, where customers have to pay for the items before moving on to other sections in the store.

Just 40 minutes down Highway 7/8 in the neighbouring city of Stratford, dozens of new video cameras have been installed at one of its Walmarts, including an extensive line over the refrigerated areas.

Shoplifting has long plagued the Canadian retail industry, but the situation has only gotten worse since the beginning of the COVID-19 pandemic, and companies are responding.

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• Dec 31, 1969
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• Dec 31, 1969
• Comments

“We have seen that shoplifting has increased across all categories,” said Michelle Wasylyshen, spokesperson for the Retail Council of Canada. “Some of this comes down to escalating inflation, some of it is due to a growing resale market for stolen goods, and there is increased organized crime.”

The Retail Council works directly with retailers to implement loss prevention tactics, which can include hiring security guards or off-duty police officers, as well as training staff on de-escalation tactics.

“Part of the problem is that it is really hard to get a true sense of what the value of a crime is because so much of it goes unreported,” Wasylyshen said.

There’s also the issue of what to do with shoplifters when they’re caught.

If a retailer catches someone shoplifting, she said, they have to physically keep them in the building until police arrive. There are multiple examples where retailers have had to wait up to six hours for police, which requires both manpower and space; retail stores aren’t equipped with holding cells.

To complicate matters further, shoplifting crimes often don’t get prosecuted when higher priority cases bump them in the courts, Wasylyshen said.

A pilot program in Manitoba is trying to utilize a common incident reporting system between retailers, police and the courts to track and convict repeat offenders.

Other projects are in the works, she said, but in the meantime, it is customers who are paying the price.

“People will often say that retail crime is a victimless crime, but it’s really not,” she said. “These thefts cost Canadian retailers billions of dollars a year, and those costs are passed down to you and I as customers when we go shopping. At a time when we’re seeing escalating inflation and we are seeing cost increases in all the things that we buy, this is added to that pile, and it’s just not helpful.”

Canadian retailers don’t actually know how much money they lose to shoplifting, explained Wilfrid Laurier University marketing professor Chun (Martin) Qiu, who specializes in retail management.

What retailers look at to gauge their losses is their inventory shrinkage, he said, which is an accounting method of looking at the actual inventory in stock compared to the inventory list. These two numbers will differ due to several factors, including clerical errors, damage, employee theft or shoplifting.

Anything that results in a decrease in the inventory is part of the shrinkage, but shoplifting is by far the largest category, said Qiu. Employee theft is also a major concern for retailers.

While Canada has yet to update its data since the onslaught of the COVID-19 pandemic, a National Retail Security Survey done in the United States last year found that 88 per cent of retailers have seen an increase in shoplifting since the beginning of the pandemic, and it now represents about $100 billion in losses a year.

Qiu said the problem in Canada is likely similar in scale to what is occurring south of the border, representing somewhere between one to two per cent of total national retail sales.

The latest figures from 2017 estimate that Canadian retailers lost more than $5 billion due to shrinkage, representing about 1.5 per cent of total retail sales, with shoplifting making up the bulk of the problem. It estimated shoplifters successfully stole items in Canada more than 10 million times in 2017, representing about 29,000 successful thefts per day.

Those numbers have likely increased over the last six years, said Qiu. It is a multifaceted problem, and Qiu is hesitant to try and simplify why people choose to steal. However, he did note than many Canadians live on relatively fixed incomes, and rapid inflation has eroded their spending abilities.

“If you are going to spend the same money as before, you are not going to be able to buy everything on your shopping list,” he said. “I don’t want to accuse anyone of doing that, but it may be part of the reason why we have seen retailers increase the price for everything.”

Shoplifters usually try to go for items that are easy to put in their pockets, he said, or they’ll simply just intentionally skip scanning items at the checkout lines.

Most retailers have policies that direct employees not to engage customers when they attempt to shoplift. At Lululemon, an athletic apparel retailer, the company went as far as firing two employees at a store in Georgia in April after they attempted to stop a robbery as it was happening. The company has a zero-tolerance policy on engaging theft and said in a statement after the incident it prioritizes employee safety over profits.

Cameras and AI-based softwares may soon be doing more of the heavy-lifting, with point of sale systems already available that can detect missed items during scanning and customers who have placed stickers for cheaper items on big-ticket items.

These new advances won’t come without a price, said Qiu.

“Retailers are going to take more measures to protect themselves, and those measures are costly,” he said. “That means the cost is going to be passed on to customers through a price hike until it reaches a shoplifting equilibrium the industry can handle.”

There’s also one other major change that may be in store for customers: the end of no-hassle return policies.

Organized retail crime doesn’t just focus on resale markets, said Qiu, it also takes advantage of return policies.

“A sale takes time, and it can be risky because it can be traced back to you,” he said. “But a return is easy. You steal from one store and return it to another. If you don’t have a receipt, well then maybe you get store credit. But store credit is still just cash.”

So, what does that mean for customers in the future?

“Returning is going to get harder, and that will hurt everyone,” he said.