Thefts on the Rise at Wal-Mart Stores

According to an Associated Press article posted on Chron.com (the Houston Chronicle), losses due to thefts by shoppers and employees is increasing in Wal-Mart stores. Errors in paperwork and fraud on the part of suppliers may account for other losses. Wal-Mart expects to lose more than $3 billion this year, a relatively small amount compared to the $348.6 billion that the chain had in sales last year.

In the AP article, retail consultant Burt Flickinger III points to the possibility that the increase in thefts may be due to a decision by Wal-Mart not to prosecute minor cases of shoplifting, preferring instead to concentrate on thefts by organized shoplifting groups. Other factors may be reduced security staff and worker discontent connected with Wal-Mart's personnel policies.

Wal-Mart denied that security staff has been cut. They also say that morale among employees is on the upturn.

Wal-Mart, which used to have a loss rate just half of other retailers, may be catching up with the industry's average, according to analysts. Overall, says AP, retailers lost $41.6 billion last year. While that amount seems large, it represents about 1.60 percent of total sales. The problem, however, is that small profit margins can be affected drastically by even a small percent of losses.

Added to the increased loss by theft is Wal-Mart's general decline in sales due to the current economic condition in retailing. Eduardo Castro-Wright, who is president and CEO of Wal-Mart's U.S. store division, has acknowledged the problem and was quoted by AP, "We are concerned about shrinkage and are investigating the cause and are taking steps to correct it." He would not say what steps the company is taking.

The retailing industry has battled the problem of theft through the use of closed circuit TV and other technology. Estimates, says AP, are that 47% of the losses come from employee theft and 32% come from shoplifting. Lesser amounts are attributed to errors and supplier fraud.

Wal-Mart's more relaxed policy toward shoplifters was publicized by WakeUpWalMart.com, a critic of the retail chain and supported by the United Food and Commercial Workers, which has unsuccessfully tried to unionize Wal-Mart workers. According to the new policy, Wal-Mart will prosecute shoplifters only if they are 18-65 years old and steal goods worth $25 or more.

According to AP, the change in policy came at the time when Wal-Mart was hiring more part time workers, reducing the experienced staff who were more adept at catching thieves.

Burt Flickinger III, of Strategic Resources Group, told AP that ""[Wal-Mart] is being run by bean counters. I am shocked at the Spartan level of staffing." He added, "There are also morale issues. Workers feel that the company is taking care of itself."

Source:

www.chron.com/disp/story.mpl/ap/business/4888