Low-tech idea could solve Walmart and Target's retail theft woes

Retail store clerks are not trained or qualified to detain people suspected of shoplifting. That's something that criminals, both petty and organized, have long exploited.

In many cases, stores have actually instructed workers to not interfere in minor instances of theft. Instead, they ask the employee to report it to store safety personnel who then build a case against the thief.

Related: Target employees are being fired for a strange reason

If shoplifting is accidental, it generally does not happen repeatedly. Many retailers check to see if certain customers have a pattern of not scanning expensive items at self-checkout or leaving a few items on the bottom of their cart.

It's a challenge even for large retailers like Walmart (WMT) and Target because even though they have loss prevention departments, they don't have their own police force. Neither retailer fully shares the steps it takes to prevent shoplifting and retail theft, but in some cases, store employees get the police involved.

A new program being tested by smaller retailers in the Bronx, N.Y., may actually have a solution to at least some of the retail theft problem plaguing both chains.

Target has scaled back self-checkout at select locations.

Image source&colon Joe Raedle&solGetty

Small retailers try a basic tech solution

Sometimes, the old-school way of doing business does not work all that well. If, for example, you're having a problem with a store, an airline, or any other big brand, it actually makes more sense to either call out your problem on X, the former Twitter, or direct message the company.

When you hashtag a company on social media highlighting something it has done wrong, that usually leads to a quick response. Brands don't want their dirty laundry in public, so they will also generally respond quickly to customer service complaints made via direct message.

That's similar to a new program being tested in the Bronx where small retailers are using WhatsApp instead of calling 911 to communicate with the police. 

"NYPD detectives at the precinct also have set up new WhatsApp chat group where retailers can upload photos and videos of shoplifters swiping merchandise in real-time," the New York Post reported. "While the pilot is only weeks old, Bronx business owners say that having direct access to officers has already resulted in arrests."

That pilot program was put into place after stores had better luck stopping crimes by contacting officers directly who had given their contact info to store owners.

Police can use the channel to identify theft patterns and find people who are exceeding the standard from a misdemeanor to a felony. It's a simple solution that could easily be applied at Target and Walmart locations. 

Retail theft has grown 

While there has been a lot of debate as to whether retailers have overstated how big a problem theft has become. shrink rate — which includes more than just stolen items — has gone up, according to the National Retail Security Survey from the National Retail Federation (NRF).

"This year’s study found that the average shrink rate in 2022 increased to 1.6%, up from 1.4% in 2021 and in line with shrink rates seen in 2020 and 2019. When taken as a percentage of total retail sales, that represents $112.1 billion in losses in 2022, up from $93.9 billion in 2021," the trade association reported.

Shrink also includes damaged items and items lost in other ways, but theft is a core part of it.

"While retail shrink encompasses many types of loss, it is primarily driven by theft, including organized retail crime. Theft – both internal and external – accounts for nearly two-thirds (65%) of shrink overall and up to 70% in some retail sectors," the report shared.

Target closed nine stores last year in order to prioritize the safety of its staff members and customers.

"In this case, we cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance. We know that our stores serve an important role in their communities, but we can only be successful if the working and shopping environment is safe for all," the chain shared on its website.

Related: Veteran fund manager picks favorite stocks for 2024