This is no ordinary shoplifting, this is M&S shoplifting...It sounds bizarre doesn't it? But experts say retailers are being so lackadaisical about shopper and employee theft as well as other forms of stock loss - known as shrinkage - that they may as well advertise it.

UK retailers lose more than £32m every week through theft and in the four weeks up to Christmas that figure will rocket to almost £108m per week, according to research by Checkpoint Systems.

On the year's busiest shopping day, Saturday December 22, that equates to £2.93m of stock lost for every hour of trading. Alcohol, Christmas groceries and toiletries are all in the top 10 most stolen items (see right). So why has an issue that affects every retailer and costs so much not been resolved? If retail really is about detail, surely this is money that could be recouped with the right team and systems in place.

BRC figures show the value of goods stolen from British retailers is at a 10-year high and growing at 8.5% per year. But theft is just the tip of the shrinkage iceberg.

When other losses caused by waste and problems in the supply chain are added to the equation, the total bill across the country comes to £3.8bn a year, or 1.34% of retail turnover, according to the Centre for Retail Research. This figure is up nearly 1% on last year. Perhaps more shocking is the fact that IGD reckons 51% of stock loss remains unresolved - nobody ever manages to find out where the missing stock ended up.

Laurence King, chairman of Oris Group, a retail loss prevention specialist, says the reason not enough retailers act to cut down on shrinkage is the perceived investment needed to do it. "Retailers have limited resources. The question of what to invest in is balanced with what managers think is going to produce the best returns," he says. "Ahead of security, they can invest in people, customer resources, new shops or advertising. There is a willingness to suffer a degree of loss if good returns on investment are being made elsewhere."

As a security and loss-prevention professional, King - who claims more than 40 years experience delivering "substantial reductions in shrinkage" - does not subscribe to that view. He believes any investigation, no matter how costly, into why losses are being incurred will pay for itself and relates a story from three years ago about one of the largest supermarket brands.

The retail giant found it was making a large loss on its delicatessen hand-cut meat sales. Directors could not figure out why and ordered an investigation, suspecting internal theft.

The real reason was more prosaic. The meat was being delivered to the retailer's warehouses on the bone and the supermarket was therefore paying for the weight of the bone but was only making profit on the meat sold. The problem was rectified and the wastage stopped.

According to official figures, the UK has the highest total value of shrinkage in Europe and the third-highest in the world behind the United States and Japan.

Though much (23.4%) of the shrinkage problem here is down to suppliers and internal errors, the vast majority of it comes from internal and external theft. According to King, the UK needs to develop a stronger culture of vigilance and learn to report and act upon any crimes witnessed.

One food industry source reported a crime she witnessed when innocently shopping for groceries in the M&S store in Whiteleys, west London.

"While browsing the aisles I noticed a homeless guy I'd previously seen outside march purposefully into the store," she recalls. "He walked straight over to the organic meat section, filled his coat with steaks and joints of lamb and ran for the doors. I darted over to the nearest security guard, who was standing by the tills, and told him.

"He replied that he knew there were thieves operating at the time. But when the tills are being emptied as they were at the time, security guards have to stand by and can't move until the job is completed.

"He went on to explain that some homeless guys had cottoned on to that fact and had taken to watching for signs that the tills were about to be emptied so they could rush inside and do their 'shopping'. I couldn't believe this sort of thing is known about but still allowed to continue."

However, an M&S spokeswoman says the store in question does not have a serious problem with theft and that there is little opportunity to abuse the till uplifts because they're not carried out at the same time. Shoplifting is always taken seriously and prosecuted when detected, she adds.

The level of loss caused by shoplifting is difficult to capture, especially in the run up to Christmas when stores are well stocked and packed full of retailers all hours of the day.

David Nutall, MD of Checkpoint Systems UK says: "With a busy store it is difficult for staff to monitor the shop floor effectively but security is not at the top of retailers' agendas.

"They want to sell more rather than lose less and build the cost of shrinkage into their margins. They also don't want to admit to the extent of internal problems like theft by staff and are more interested in what is going out the front door than the back. But the cost of turning a blind eye is immense."

Sure enough, The Grocer struggled to find a retailer to talk about shoplifting and theft losses. However, Tesco supply director Tony Mitchell told industry colleagues at the IGD Supply chain summit last month of changes Tesco has made to address non-theft types of shrinkage in recent years.

"We were letting the stores do their own thing with recording inventory and reporting on stocks and it was a fairly loose process that led to errors in our systems," he said. "Our analysis showed 50% of our products had an incorrect stock record. We now have a scheduled counting process for all products and have reduced stock record errors to 25%."

Nearly as much of a problem as shoplifting is pilfering of goods by staff, whether they are working at checkouts or ­driving trucks of deliveries through the night.

In Europe 41.7% of theft is thought to happen in the stock room while nearly 35% of it happens at the checkout, according to the Centre for Retail Research. Despite the growth in the problem as a whole, spending on retail security across Europe has dropped by 0.3% this year to £5.3bn.

Critics say this makes it easier for retail staff to work their scams. Classic examples include cashiers 'refunding' money on to their own credit cards for items that were never returned or even bought by customers, warehouse workers taking products to a shop for a refund, and staff members holding their finger over the barcode when swiping products for friends, a practice known as 'sweethearting'.

But experts in loss prevention say there is much that can be done by retailers and that the price of the software retailers need to combat shrinkage is coming down all the time.

Many retailers have found that CCTV as a lone solution is not sufficient, as customers will learn where the cameras are.

This makes it very easy to be filmed placing groceries into a shopping basket before nipping round to the back of an aisle, out of the view of cameras, and putting the goods into a coat pocket.

Oris and others in the loss prevention business are developing James Bond-style gadgets to detect crimes and mistakes. Oris has developed an intricate software system called Loss Manager, which uses data mining to identify potential problems.

"Data mining means taking hordes of information from all the complex processes of retailing such as till checkout, cash banking and supply ordering and sending it all to one computer, " says managing director Andrew Wood. "This software can immediately spot any abnormal behaviour and trace it back as far as a single till. Within a large multinational corporation it can identify a single refund being made to a credit card that was not used to purchase goods in the first place.

"It might similarly identify when personnel responsible for banking cash on a daily basis are not doing so but rather saving it up for a few days and then banking it altogether. This could mean the person involved is borrowing from the takings for personal reasons and paying it back a couple of days later."

The Loss Manager programme also provides a 'train of thought' facility that flags up similar crimes and repeated associations between a sales assistant and a credit card, for instance. In this way it can often identify collusion between shopfloor staff and delivery people.

Retailers that really want to push the boat out could twin the Loss Manager programme with another computer software programme called Case Manager. Once Loss Manager has given its helicopter view of the business and identified the problem for the retailer, Case Manager automatically emails the data to the relevant member of the retailer's own investigations team, giving the investigator a body of evidence and ensuring that no investigation is ever incomplete.

It also emails a hi-tech specialist law firm to ensure the case can be seen through to the end in a "proper and lawful way", according to Wood.

If cost has been an issue in the past, it is becoming less so these days. Loss Manager and Case Manager together cost about £250,000 a year ago, for instance, but the basic package is now as little as £150,000.

There are other simpler, more systemic issues that need to be addressed, says Darran Watkins, senior business analyst at IGD. Shrinkage is far too often caused by basic invoicing and delivery errors. The key is prevention, he suggests.

"Miscalculations occur all the time in really large organisations, when the computer tells you there are 10 of the same items in the delivery truck but there are in fact only eight for whatever reason," he says. "That loss is never resolved because it often isn't big or significant enough to report. But more could be done about the millions in losses that are attributable to supply process failure by spending more on prevention."

Better intra-department co-operation and better forecasting can help reduce wastage but that technology will "inevitably" form part of the solution, he says.

Retailers are only now beginning to up the ante against shrinkage, says Malcolm Peden, CEO of IntelliQ, another retail loss prevention specialist. "Retailers have indeed turned a blind eye in the past but the economic climate has changed and they can no longer rely on profit growth through opening new stores," he says.

"They are now being forced by the credit crunch to look at every part of their business and are starting to focus on shrinkage. We have been going for 10 years and have 25 clients. We now have 12 potentially new customers trialling our EPoS fraud products, an unprecedented level of interest."

But technology should not be viewed as the only solution, warns King. "Technological solutions cannot work in a vacuum," he says. "They have to operate alongside a culture of zero tolerance to internal theft that is consistently applied so that employee dishonesty literally has no place to hide."

In short, it's time for retailers to open their eyes and act. They're being robbed blind and only they can put a stop to it. If they face up to the challenge, next year shrinkage may finally become a ghost of Christmas past.nTop 10 most stolen items at Christmas (in rank order)



Women's wear


Electronic media (games, DVDs, CDs)

Razors and razor blades

Electronics (ipods, Nintendo Wii)

Christmas groceries

Underwear and lingerie


Source: Centre for Retail ResearchThis is Trevor Kay

- and he's got a problem. He manages Somerfield's Chapel Allerton branch in Leeds, which must be close to the top of the supermarket shrinkage charts.

When we interviewed Kay in September as the winner of The Grocer 33 Top Store award, he revealed shoplifters had hit his store a shocking 50 times in just three weeks. Local gangs had been terrorising staff and pulling every trick in the book to nick high-end goods. Some were concealing bottles of Champagne under puffa jackets and using diversion tactics to evade the store security guard, for instance.

Police even interrupted our phone interview with Kay to follow up the latest incident.

The problem hasn't been as acute over recent weeks, despite the approach of the festive season.

However, there have still been incidents and unfortunately the shrinkage problems haven't been confined to customer theft.

Last Saturday Kay was forced to detain an ex-employee who was trying to escape with £164 worth of stolen goods in a shopping trolley.

"He broke my phone and kicked my office computer before the police eventually arrived," said Kay.

Such incidents are traumatic and Kay admits security at the store remains an issue. At the moment, it is open from 8am until 8pm but the security guard is only on duty between 1pm and 8pm. However, there are no plans to change any of the security arrangements over the Christmas period when shrinkage, mainly through theft, shoots up by more than 200% across UK retailers, says deputy store manager John Mallinson.

"We have no extra hours built into the business for extra loss prevention and our security guard's shifts will remain the same," he says.

However, a spokeswoman stresses that all Somerfield stores work closely with community police to deter thieves and minimise the shrinkage problem.