Negative Effects of Shoplifting on the Economy

Written by jodi strehlow
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Negative Effects of Shoplifting on the Economy
Shoplifting costs the average family £195 per year in price increases. (Jupiterimages/Polka Dot/Getty Images)

Shoplifting costs the retail industry approximately 12.1 billion dollars in lost revenue every year. Ninety-five per cent of retailers are victims of organised retail crime. Store owners incur expenses related to theft by installing expensive deterrent systems. Hiring and training people to reduce opportunities for theft affect retailers' operating budgets. Store owners raise consumer prices to pay for theft prevention. Unfortunately, some store are unable to recoup loses and are forced to close.

Increased Prices

To decrease a shoplifter's opportunity to steal, stores invest thousands of dollars in security systems and antitheft devices, such as sensor tags on merchandise that are removed only after purchase. Smaller, expensive items, locked up in display cases, require a salesperson to unlock and monitor the merchandise while a customer inspects the item. Sales associates also monitor exits and fitting room activities. The additional staffing needed to prevent theft and electronic loss prevention systems costs money that store owners can only recoup through price increases.

Store Closures

Retailers will offset theft-related losses by laying off employees to decrease payroll and related expenses. Loss of jobs affects the immediate area's unemployment rate and the local economy. Decreasing the number of employees may also result in more opportunities for shoplifters to steal. Stores that are unable to recoup losses from theft may be forced to close. As more stores close, more people lose jobs, and unemployment rates increase. Store closures impact unemployment, loss of revenue for commercial property owners and decreased tax revenue. Community members may need to travel out of the area to shop, resulting in loss of time and increased fuel expense.

Law Enforcement

Police officers must detain and arrest thieves. For minors, officers must locate parents in order to release the teen shoplifter into parental custody. Parents must take time off work to resolve the situation. Adult criminals may spend time in police custody during booking and sentencing. In addition to filing reports in cases involving minors, police and court officers may need to conduct interviews with parents, school officials and neighbours. Shoplifting places additional burdens on law enforcement efforts paid for through local and state tax revenues. An increase in law enforcement activities ultimately affects tax payers.

Judicial System

Shoplifting affects the judicial system. Since tax revenue funds the judicial system, taxpayers pay for the prosecution and imprisonment of all criminals. Increases in crime can overwhelm the judicial system in terms of processing and incarcerating criminals, necessitating the expansion of prison facilities. Processing and monitoring shoplifters' sentencing guidelines also places additional demands on judges and the court system. The state of Indiana offers numerous programs designed to educate offenders and prevent future crimes, available for first time offenders and shoplifters already in the juvenile detention system. These types of programs show the state's awareness of the costs associated with shoplifting and the dedication of resources directed toward crime prevention.

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