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Wednesday, June 19, 2024

Tackling a modern-day menace

Karen Green investigates the hidden cost of shoplifting and what it means to UK food and drink brands

 

What is driving the upward trend in UK grocery shoplifting?

And more importantly, what is the impact it’s having on food and drink brands who are having to manage the hidden cost of shoplifting?

The trend is up by 37 percent YoY according to Home Office data (Jan-March 2023). It represents the biggest increase ever and equates to eight million incidents per year, costing £953 million (BRC figures) and that doesn’t include all the events that go unreported.  It isn’t just happening in the perceived poorer parts of the country either. Number one theft spot in the UK is Westminster with 16.64 crimes per 1,000 head of population annually, closely followed by rural Lincoln (15.23 crimes per 1,000 head of population).  If you’re thinking of opening a store and want to find a safe place to do it then West Devon is the place to go!

So theft is up yet, sadly, prosecutions are down. The number of people being sanctioned for offences has plummeted from 47 percent to just 18 percent. In short, swathes of people are shoplifting and getting away with it, safe in the knowledge there will be no repercussions.

But who is committing these crimes?

Are they all stereotypical hoodie-wearing gangs, mobilised to steal high-ticket items and then sell them on the black market?  Well, these are certainly on the increase and as the penalties for shoplifting have decreased, so the deterrent is removed. There are also the well-publicised TikTok campaigns encouraging young people to go and help themselves in orchestrated attacks.

But there are others: the people who simply cannot afford to buy food in the current climate and are stealing to feed their families. Food poverty in the UK is now among the highest in Europe, with 9.77 million adults experiencing food insecurity in September 2022 and four million children in food poverty in January 2022 (government statistics) and with high food prices, interest rates and other costs rising, the challenge is there and people are taking food.

But there is also a third, more disturbing group: Google “middle class shoplifting” and you’ll find numerous, recent articles which put quite a different spin on shoplifting which leaves me slightly queasy.

Women (middle class, between 40 and 50) who are simply stealing for kicks.  And justifying it in the most bizarre ways that almost seem to be condoned by the British press.

The thrill lies in getting away with it, I certainly don’t do it for financial gain because I don’t need to’ seems to be a common thread.

This tsunami of theft is creating enormous pressure on UK grocery retail, whether that’s the need to employ security staff or deploy increasingly creative/elaborate ways to stop these people in their tracks. The Coop reported their bill, for preventative measures, has blown out to £200 million.

Dame Sharon White, the soon-to-depart boss of the John Lewis Partnership (which includes Waitrose) labels it an ‘epidemic’, not just of financial loss but also violence against staff and the disruption it causes in store.

But what is the impact on food and drink brands? The press talks a lot about the effect on UK retailers and of course, financially, they are bigger and measurable numbers in terms of investment in preventative measures, shrinkage etc. But let’s not forget the hidden cost to the actual brands themselves which needs addressing.

There are three key challenges:

Brand image

Traditionally, products stolen from retailers have been high-ticket items such as perfume, alcohol and razors. However, that trend is evolving with items like Lurpak now even carrying security tags. It is pretty hard to identify the brand name through the large, sticky label that has been slapped across the front of pack. Consequently, it is impossible to communicate the brand values and product recognition when the items are heavily secured with anti-shoplifting measures. This makes it harder for consumers to identify and connect with their products on store shelves and generally puts them off buying – especially when it is a challenger brand whose pack designs need to work hard to complete with their mainstream cousins.

In some cases, it can also reinforce the brand’s image of being too expensive by becoming a clear shoplifting target – the consumer might look at that yellow sticker and decide own label is the better option.  Lurpak has lost £9.5 million of sales and 21 percent of volume (NIQ 52 w/e 25 March 2023) with own label taking a bigger chunk. Own label volumes are up 4.9 percent, while brands are down 11 percent [Kantar 52 w/e 14 May 2023].  Maybe not all to do with security tags but let’s be honest, it certainly doesn’t help!

On shelf availability

The retailers are finding many innovative ways to reduce the ability of thieves to remove products from their shelves. For example, there was a well-publicised tweet about M&S not displaying more than one or two steaks at a time on shelf and they confirmed it was a deliberate policy to reduce theft. But, for food and drink brands, this has a devastating effect on shelf availability and brand visibility. Not only does it make life difficult for the customer to buy the products, it also reduces on shelf impact and dissuades customers from impulse purchases.

This ease of purchase is also impacted by another new approach adopted by the Coop to deploy dummy packaging: imagine you dash in to buy a jar of coffee only to be told you have to queue up for the real thing. Do you just put it down and walk out or do you put in the effort to make the purchase – more likely than not you’ll leave…losing the brand another sale. And, of course, some brands are being asked to supply false packaging to put on shelves at their own cost.

Supply Chain Forecasting

And finally, how do you monitor sales performance when you don’t know if your rate of sale is being impacted by true out of stocks, restricted display or a particularly well organised few raids?  How can you forecast sales when thieves might actually be taking more than you are genuinely selling? This causes havoc with supply chain forecasting and also category management planning. Not to mention the waste problem. Most grocery retailers use “waste” as a metric for judging food and drink brand performance. I used to be commercial director for a sushi company and our waste was in double digits.  Because it was own label, we did not have an agreement to pay for waste but a lot of companies do. So, the more shoplifting goes on, the more the brands are having to build that into their commercial models but it is difficult to know what was actually wasted and what was stolen.

In conclusion, shoplifting is clearly a modern-day menace that is costing UK grocery retailing a significant chunk of bottom line. But it is also affecting the brands they sell in less obvious ways, harming their image and impacting sales growth. Every brand needs to assess shoplifter desirability and develop a strategy to protect future sales and profitability. It is no longer champagne brands that need to worry but butter, honey, chocolate and cheese.

Confession: I do confess to stealing the odd pick n mix from Woolworths when I was little.

Karen Green began her career as a retail buyer with Tesco. For the past seven years, she’s been mentoring and coaching successful business owners, CEOs and sales teams to sell more and sell better. https://foodmentor.co.uk

 

Karen Green
Karen Green
Karen Green began her career as a retail buyer with Tesco. For the past seven years, she’s been mentoring and coaching successful business owners, CEOs and sales teams to sell more and sell better. https://foodmentor.co.uk/

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