(Bloomberg Businessweek) -- To stop shoplifting, merchants have tried everything from adding more guards and cameras to placing products under lock and key to deploying new security tags attached to garments. Still, theft—which can be due to both outsiders and employees—resulted in an estimated $73 billion in lost sales for retailers in the US alone in 2022, according to the latest survey released by the National Retail Federation. In the UK, losses from store thefts doubled in 2023, to £3.3 billion ($4.3 billion), from the previous year, according to the British Retail Consortium.
Now retailers are considering something new: weaving radio-emitting threads into some clothing, turning the garments themselves into anti-theft devices.
Zara owner Inditex SA, the world’s biggest publicly held clothing retailer, is among those who have studied the change. The retail giant in Arteixo, Spain, has talked with a small Spanish technology company, Myruns, and telecommunications operator Telefónica SA about the possible application of a system based on an anti-theft alarm product so thin it’s imperceptible to the naked eye, according to people familiar with the matter, who asked not to be named discussing private information. An Inditex spokesman says the company does not plan to carry out in-store tests of the technology.
Retailers around the world are grappling with ways to cut losses from so-called inventory shrink, which drew global attention in the years after the pandemic when companies blamed rampant theft for disappointing sales, and videos of “smash and grab” incidents of flash mobs storming stores went viral.
The technology from Myruns, in San Sebastian, Spain, may be just one of the efforts to curb thefts that have been studied by Inditex, which declined to comment on specific projects. Myruns’ product, which one of the people says is five times thinner than a human hair, or about a thousandth of an inch, uses a conductive ink derived from cellulose to transmit signals. It can set off alarms if someone walks out of a shop with items whose woven-in tags haven’t been deactivated, according to the people. The novel ink replaces aluminum, the main material used in most alarms. That would mean retailers wouldn’t need to rely on the metal for alarms, making the devices potentially biodegradable and supporting the garments’ recyclability.
Competitors that make threadlike radio-frequency identification (RFID) technology containing metals include Primo1D, an offshoot of a research center in Grenoble, France; and RFID Threads Ltd., in Nottingham, England, formerly known as Adetex.ID.
“Retailers have to make a decision about how visible they want their loss-prevention strategy to be,” says Emmeline Taylor, a criminology professor and member of the UK government’s retail crime steering group. “Some businesses want to have very visible alarms, a guard presence, public view monitors. At the other end are businesses who want the strategy to be invisible, seamlessly embedded into their infrastructure.”
A merchant’s brand positioning can make a difference. “In some stores, particularly high-end and designer shops, retailers don’t want to give an impression that crime is an issue or cast any impression that individuals picking up items might be criminally minded,” Taylor says.
Inditex, for one, has tried over the years to stay ahead of shoplifters. Last year it announced it would replace hard plastic alarms on garments that require clerks to remove them with a new security technology to enable self-checkout in stores. This system initially relied on small microchips affixed to the labels, but shoplifters quickly figured out how to remove them. Myruns’ technology might prove harder for thieves to dislodge. But it’s not clear how much a major retailer like Zara would have to spend if it were to roll out the technology across all of its stores.
Originally set up to provide time tracking tags for sporting events, Myruns has expanded to supply RFID to various manufacturers and retailers. It’s sold RFID systems to Spanish companies including car-parts maker Gestamp and the company that runs Madrid’s metro system.
A partnership with Evolgene Genomics, a protein engineering company that Myruns acquired last year, enabled the development of the conductive ink. Telefónica already provides anti-theft tech support to retailers and specializes in managing services from various technology suppliers. Spokespeople for Myruns and Telefónica declined to comment.
Although store theft is difficult to track, retailers’ adoption of self-checkout technology—aimed at improving the retail experience for customers while also reducing the labor costs of checkout employees—may be making shoplifting easier. A 2022 survey of 93 retailers by the University of Leicester found that self-checkout causes 20% to 25% of all store inventory shrink.
Earlier research also showed that levels of loss were higher in stores that had self-checkout than in those that didn’t, with some grocery retailers recording losses 90% to 100% higher. Academics estimated that shops where more than half of the transactions went through self-checkout could expect their shrinkage to be 31% higher.
On an earnings call last year, Costco Wholesale Corp.’s former chief financial officer, Richard Galanti, blamed an uptick in losses a few years ago on the company’s rollout of self-checkouts. More recently, retailers including Walmart Inc. and Target Corp. have reassessed their self-service plans, citing theft concerns.
Inventory losses from theft, damage and errors accounted for as much as 1.6% of American retailers’ sales in 2022, according to the National Retail Federation. That’s up from 1.4% in 2021 but in line with the numbers from 2019 and 2020. It’s difficult to say whether shoplifting is increasing, but some data point in that direction. Police in England and Wales recorded 402,482 shoplifting offenses in the year to September 2023, the highest rate in 20 years. In the US, reported shoplifting crimes also soared between mid-2023 and mid-2024, according to the Council on Criminal Justice.
Pressure to improve profitability and reduce losses has pushed many retailers to step up their traditional anti-theft efforts. Inditex rival Hennes & Mauritz AB, or H&M, has increased the number of security guards at its stores, including in the US. Associated British Foods Plc’s Primark has also hired more security staff, in addition to investing in closed-circuit television systems and body cameras worn by staff. And in the UK, retailers such as John Lewis, Sainsbury’s and Tesco have teamed up with law enforcement to help fund a team of police and intelligence officers targeting shoplifters.
The lack of visible security can encourage shoplifting, but more drastic measures can impede sales, says Martin Gill, a UK-based consultant whose work involves testing retailers’ security by trying to steal things.“Certain retail strategies, which aim to boost sales, have made it much easier to steal,” he says. “The key for good security is not to stop theft from happening at all costs, but do as much as possible to reduce the number of offenses. It’s always about the balance between sales and security.”
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