Shoplifting in Canada: A Growing Threat to Retail Insurance
Shoplifting in Canada has become a growing concern for retailers, with organized retail crime and store theft on the rise. “Retail crime contributed about $5 billion in losses across Canada,” Retail Council of Canada Loss Prevention and Risk Manager Rui Rodrigues said in an interview with CTV National News.
This trend has significantly impacted businesses, from financial losses to increased security measures. As a retail business owner, understanding the current landscape of retail theft is crucial to protect your assets and maintain profitability.
This article delves into the escalating issue of retail fraud and its implications for your business insurance.
Table of Contents
The Rising Tide of Retail Theft
Statistics on Increased Shoplifting
Canadian businesses are facing a growing challenge as retail theft continues to rise. According to data from Statistics Canada, there has been a significant increase in shoplifting rates, with a 31% rise in 2022 compared to the previous year. The Retail Council of Canada (RCC) has reported that some of its members are experiencing a staggering 300% surge in thefts since 2020, resulting in estimated annual losses of $5 billion.
“These crimes are costing all of us because they drive up the prices of products that we purchase on a regular basis,” said Chief of Police Myron Demkiw.
Every year in Canada, a staggering $10 billion is lost due to various forms of theft, including shoplifting, robbery, and burglary. These financial losses have contributed to a staggering 30% of all business failures.
Police-reported crime for selected offences by census metropolitan area, 2023
The rates are determined by considering a population of 100,000. The percentage changes are calculated using unrounded rates.
Sourced from Statistics Canada
Factors Contributing to the Surge
Key Factors Behind Retail Theft:
- Economic Pressure: 82% of Canadians associate rising food prices with profiteering
- Reduced Consequences: Strain on police resources has created a backlog of cases
- Pandemic Effects: Rise in bold behaviour as mask use made concealing identities easier
- Staffing Issues: Fewer employees on the floor creates more theft opportunities
According to Sylvain Charlebois, a professor in food distribution policy and senior director of the Agri-Food Analytics Lab (AAL) at Dalhousie University, the inflation in food costs has been one of the driving forces for Canadians to steal. “I do believe a very small portion of people want grocers to pay because they think they’re profiteering,” says Charlebois.
This perspective is supported by a recent survey conducted by AAL, revealing that 82% of Canadians associate rising food prices with profiteering.
During the pandemic, there was an alarming rise in bold and aggressive behaviour within retail stores, as observed by Rui Rodrigues, executive advisor, loss prevention and risk management at RCC. With the use of masks, perpetrators became more confident in concealing their identities.
Furthermore, there was a significant decrease in police and court response when it came to prosecuting these offenders. According to Rodrigues, the strain on police resources and prosecutors trying to make up for lost time has created a backlog of cases. As a result, criminals have become increasingly emboldened, knowing that the consequences of their actions are diminishing.
Impact on Retailers’ Bottom Line
The financial toll on retailers is substantial. The average shoplifting incident cost retailers $461.86 in 2020. With stores catching shoplifters only about 2% of the time, the impact on profits is significant. The retail industry experiences substantial losses, with approximately 70% to 80% attributed to internal issues such as cash and inventory shortages.
The Daily Cost of Retail Theft:
- $6 million: Daily losses from customer theft
- $3 million: Daily losses from employee theft
- $461.86: Average cost per shoplifting incident
- 2%: Percentage of shoplifters caught by retailers
On a daily basis, customers contribute to theft losses of nearly $6 million. Similarly, employees within the retail sector are responsible for theft losses amounting to almost $3 million per day.
This has led to difficult decisions for retailers, including raising prices, closing underperforming locations, or making deep cuts to labour costs to remain solvent.
Evolving Tactics of Shoplifters
Cybercrime
Resale Marketplaces
When it comes to organized retail crime, thieves are capitalizing on the growing popularity of resale platforms. According to RCC’s Rodrigues, the rise in outlets has contributed to the increasing prevalence of organized retail crime. Criminals are utilizing social platforms to sell stolen goods directly to end users, bypassing traditional channels.
In June 2024, Vancouver police inspectors Mario Mastropieri and Mike Kim reported a significant seizure of cash, drugs, and property, totalling over $650,000. Kim, who oversees Vancouver police’s identity theft and anti-fencing unit, explained that these criminals acquire stolen merchandise from multiple sellers and then sell it on popular e-marketplaces such as Facebook, Craigslist, and Kijiji.
Comprehensive Insurance Coverage for Retail Businesses
1. Theft Insurance
Theft insurance covers losses resulting from theft, burglary, or robbery. It compensates you for the value of stolen merchandise, equipment, or cash. Having theft insurance ensures you can recover financially and continue operating your business despite theft incidents.
What Theft Insurance Typically Covers:
- Stolen Merchandise: Inventory taken during shoplifting or after-hours break-ins
- Cash Theft: Money stolen from registers or safes
- Equipment: POS systems, security cameras, and other business equipment
- Property Damage: Damage caused during break-ins or theft attempts
2. Business Interruption Insurance
Business interruption insurance covers lost income and operating expenses if your retail business is temporarily unable to operate due to a covered event, such as a theft-related incident.
It compensates you for the financial losses you incur during downtime, allowing you to recover and rebuild without significant financial strain.
Frequently Asked Questions
How has retail theft evolved in Canada in recent years?
Retail theft in Canada has evolved significantly, with a 31% increase in shoplifting rates in 2022 compared to the previous year. There’s been a shift from opportunistic theft to organized retail crime, where groups systematically target multiple stores. Additionally, thieves now leverage online marketplaces like Facebook, Craigslist, and Kijiji to resell stolen goods.
What types of insurance should retail businesses consider to protect against theft?
Retail businesses should consider a comprehensive insurance strategy that includes theft insurance to cover stolen merchandise, equipment, and cash; cyber insurance to protect against data breaches and digital theft; and business interruption insurance to cover lost income if theft incidents force temporary closure.
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Last updated:
Posted in Business on March 30, 2024 by Hope Prost
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