Shoplifting takes toll on smaller businesses
Stores with smaller profit margins have difficulty recovering.
CARY, N.C. — In early July, $3,000 in designer dresses, slacks and jackets were stolen from ADORE Designer Retail Boutique in this Raleigh suburb, one of Nancy Alinovi’s two consignment shops in the area. She still feels sick about it.
“It’s just this feeling in your chest,” she said. “It’s not a victimless crime.”
Alinovi said it will be months before everything returns to normal at the family-owned boutiques, which cut prices in order to stay afloat after the theft. Her experience shows the toll shoplifting takes on small businesses, where margins are small and business is personal.
According to a National Retail Federation’s security survey, shoplifting accounted for 38 percent of the $44 billion in retail inventory loss due to crime in 2014.
Large capital losses from theft are especially hard on small businesses, said Jennifer Martin, executive director of Shop Local Raleigh, an organization that advocates for and supports small companies. Many smaller firms are tight on time and money, and an unexpected event can push them to the breaking point.
Most have insurance, but claims can be a hassle and cause rates to increase, so some companies choose not to file.
The specter of shoplifting can loom large at luxury consignment stores in particular. Many of them are family owned, and sell small, expensive items. A Chanel purse, for example, may sell for thou- sands of dollars.
The incidents can strain personal relationships with customers, which are key to the success of any small business, but especially consignment stores, because of the unique business model. Typically, a consignor leaves an item at a shop, and is sent a check when that item is sold. The shop owner gets a cut of the sale, usually between 40 and 50 percent.
ADORE’s consignment contracts do not require the store to compensate consignors for goods that are stolen, Alinovi said, but she pays them in full in order to keep consignors coming back.
That means she will be spending the next few months making up the money she lost to theft — the profits she would expect from the clothes, plus money she owes to her consignors. She temporarily cut prices in order to boost sales so she can make those payments.
Preventing theft
Small businesses with more conventional inventory are harmed by shoplifting more than chains, Martin said. She used to work as a manager at a large retail chain, and she said the incidents typically do not directly affect employees like they do in small stores. Instead, inventory tallies go to a corporate office which has most likely built losses into the year’s budget.
Most large stores also have company-wide infrastructure in place to prevent losses, Martin said. All employees at Bath & Body Works, where she worked, had to watch a video that outlined procedures to prevent shoplifting, and there was a hotline employees could call.
Some small businesses substitute a personal touch, in order to fight bad behavior in the store.
Nora and Nicky’s consignment boutique in downtown Raleigh is airy, with walls painted white or in bright colors and wood floors visible between racks. There is a bowl of candy on a large glass desk that faces the entrance. Cathy Brooks, who owns the boutique and another in north Raleigh, said the open floor plan means employees can easily spot unusual customer behavior.
Brooks said, however, that customer service is her most effective theft prevention technique. Her employees greet customers and pay attention to them throughout their visit, she said. While intended to serve customers, the attention also reduces opportunities to steal.
“If the opportunity presents itself, people will take advantage,” Brooks said.
The July shoplifting incident wasn’t the first for ADORE, Alinovi said. Four years ago, a man stole clothes from its north Raleigh store when the lone employee was distracted. Alinovi shared the surveillance video, and someone alerted police after recognizing the man.
Police have not arrested anyone in the most recent incident, which also occurred when only one employee was working.
Alinovi said there would be at least two employees in her stores at all times in the future, even though that can be a logistical challenge.
“It’s a personal experience when you come in here,” Alinovi said. “So when someone comes in and just blatantly rips you off it’s the worst feeling.”