Wal-Mart: Shrink on the Rise

Increases possibly tied to change in LP procedures on prosecuting shoplifters

Such pilferage as a percentage of sales has been declining since the mid-1990s as retailers have invested in new technology such as closed circuit TVs, according to Richard Hollinger, professor of criminology at the University of Florida.

About 47 percent of the dollars lost came from employee theft, while shoplifting accounted for about 32 percent, according to the National Retail Federation report. Administrative errors account for 14 percent, while supplier fraud accounts for 4 percent. The remaining 3 percent is unaccounted for.

In one of the more brazen employee thefts, a man wearing dark clothing and a ski mask entered a Port Clinton, Ohio, Wal-Mart store in January at midnight unnoticed by employees and stole $45,000 from the store safe. The store's night manager, Dana Walker, 30, was later arrested for the crime. He became a suspect because he knew the combination to the safe, police said.

The company's vociferous critic WakeUpWalMart.com, funded by the United Food and Commercial Workers which has for years tried to organize the retailer's workers, publicized the company's decision last year to relax its zero-tolerance policy on shoplifting. The new policy seeks prosecutions of first-time offenders only if they are between ages 18 to 65 and steal at least $25 worth of merchandise.

That change may have emboldened some folks to shoplift, said Mark Doyle, president of Jack L. Hayes International, a retail consultancy on loss prevention.

WakeUpWalMart.com and some former employees said Wal-Mart may also have been trying to appease complaints by some police departments that its stores tied up police with too many shoplifting calls. Wal-Mart has denied that.

Wal-Mart also may have been spooked by worries about lawsuits from wrongful death, unlawful imprisonment and other legal issues related to aggressively chasing down shoplifters. In March, Wal-Mart agreed to pay $750,000 to the family of a suspected shoplifter who suffocated to death as loss prevention workers held him down in a parking lot outside a store in Atascocita, Texas. The shoplifter died in August 2005 in a parking lot, according to published reports.

The change in policy came at the same time the company began using more part-time workers - in part because of a new scheduling system that matches staffing more closely to peak shopping hours - and shifting security personnel, analysts and critics say. That has left the discount chain without an experienced and loyal staff to monitor what's strolling out its back and front doors, analysts and some former employees supplied by WakeUpWalMart.com said.

"The business is being run by bean counters. I am shocked at the Spartan level of staffing," said Flickinger, managing director of Strategic Resources Group. He added, "There are also morale issues. Workers feel that the company is taking care of itself."

While Wal-Mart denies that it has cut anti-theft jobs overall, it said it has adjusted staffing to put more personnel in stores in high-crime areas and fewer in stores with less trouble.

However, Dan Meyer, a former district loss prevention supervisor for several Wal-Mart stores in New Jersey, disputes that. Meyer, who said he accepted a buyout last fall after almost 12 years with the company, said Wal-Mart reduced the number of loss prevention staff in each store last year and redesigned their jobs in a way that was less active and more administrative.

"That's why shrinkage is up," he said.

Meyer said he averaged 13 apprehensions a month during most of his time at Wal-Mart. That number dropped to three to four a month in the months before he left last October. Meyer said his totals dropped because there were fewer security staff and less support from his managers for aggressively rooting out theft.