Retailers struggle to prevent thefts as higher-income consumers ramp up online fraud

The news: UK retailers say store crime is “spiralling out of control,” after thefts and violent incidents skyrocketed in 2024.

• The number of customer thefts rose 22% YoY to 20.4 million—or an average of over 55,000 per day—according to a survey by the British Retail Consortium (BRC).
• In total, customer theft cost retailers £2.2 billion ($2.8 billion) in 2024, an increase of 21% YoY.

Retailers sound the alarm: UK retailers’ concerns mirror those of their counterparts across the pond: The BRC, like the National Retail Federation (NRF), called out organized crime as a contributor to rising levels of theft, noting limited support from law enforcement. The lack of consequences for shoplifters is another sore spot, with retailers singling out higher thresholds for felony charges and a lack of interest in low-value thefts as major deterrents to reporting crimes.

While that may be true, it’s not the whole story.

• Retailers’ drive to keep staffing levels lean by expanding self-checkout and other so-called labor-saving technologies has created more opportunities for people to steal.
• It is also unclear precisely how much merchandise is lost to crime. Reports from both the BRC and NRF extrapolate losses based on data from a small number of respondents, and retailers themselves are reluctant to disclose the precise dollar value of retail shrink (which includes, but is not limited to, theft).

Online thefts on the rise: Most of the discourse around retail crime has focused on in-store theft, but online fraud is becoming a bigger headache for retailers—particularly since, unlike shoplifting, it is more likely to involve higher-income consumers.

• Roughly 7 in 10 US retailers (68%) said that ecommerce theft and fraud were a bigger concern in 2024 than the year prior, per an NRF report.
• 1 in 4 higher-income shoppers reported engaging in some kind of first-party fraud during the holiday season—such as disputing legitimate credit card charges or falsely claiming packages were stolen—compared with just 11% of low-income consumers, according to a survey by Socure.
• Those practices are gaining currency among younger consumers. More than half (55%) of Gen Zers and 49% of millennials making over $100,000 stole from an online retailer in 2024.
• Many of those customers feel emboldened by the ease of engaging in such practices (as demonstrated by social media influencers) as well as the relatively low stakes—with the worst outcome being that they have to pay for their purchases.
• Digital shoplifting is also seen as a victimless crime: 39% of US consumers believe first-party fraud causes no harm, while 63% of those who engage in the practice believe that large retailers have the resources to cover potential losses.

Our take: For the BRC, as well as the NRF, effectively combating retail crime requires stricter penalties for offenders and more support from legislators and law enforcement.

But that’s only part of the solution.

• Increasing staffing levels in stores would help eliminate blind spots and act as a greater deterrent to would-be thieves.
• Retailers also need to develop more sophisticated online fraud detection mechanisms to root out repeat offenders and crack down on policy abuse.