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Costco says that “strictly controlling entry and exits and using a membership format” will help curb retail theft.
Anthony Bolante / Reuters

  • Walmart, Target and other major retailers are reporting losses due to theft.
  • Costco’s CFO says Wholesale Club is lucky to buck a broader industry trend.
  • Here’s how Costco’s model can help beat shoplifting.

Walmart, Target, Dollar Tree and other major retailers have warned of an increase in shoplifting that is plaguing stores across the US.

But one company seems to be immune to the problem: Costco.

Richard Galanti, the warehouse chain’s chief financial officer, said Thursday that shrinkage — or losses due to theft, fraud or other causes — has remained largely unchanged.

“We don’t see any significant change in the reduction,” Galanti said on the earnings call. We are lucky in that respect.

The company saw a modest increase after it began self-checking three years ago, but those rates have since returned to long-term trends, Galanti said.

Target, for its part, expects losses from the cuts to reach more than $1 billion by 2023, up $500 million from last year. Walmart CEO says stores will close if thefts don’t drop in December Dollar Tree said this week it is considering locking down more items in stores as it faces growing crowds.

Overall, theft contributes to $95 billion in losses for U.S. retailers each year, according to the National Retail Federation, an industry group.

So what exactly is Costco doing? Here are four strategies to prevent shoplifting.

Costco collects personal information on its customers

Costco requires a membership to shop there. To register, consumers must pay an annual fee and provide their photo, home address and other identifying information.

Consumers are less likely to steal when a store has a level of personal information about them.

Stores block shoppers from entering without a membership.

Costco is strict about its membership rules. Shoppers must scan their membership cards to complete purchases and also show them to enter stores.

Employees stationed at the entrance of each store check the cards to ensure that the paid member belongs to any particular group of shoppers.

“By strictly controlling entry and exits and using a membership format, we believe our inventory losses are significantly lower than conventional retail operations,” Costco said in its annual report.

Costco requires customers to show their receipts at checkout

Employees are stationed at store checkouts to ensure receipts match items in shoppers’ carts. Every receipt and cart is verified.

A Costco receipt has more information than meets the untrained eye, employees previously told Insider. There is a code indicating that the receipt was printed on that day; Total number of items sold; supervisor’s initials on big-ticket purchases; and codes for checking large products such as paper towels or water cases.

Large items are difficult to steal

A common tactic for organized retail crime rings is a “push” where a thief rolls a cart full of stolen merchandise to a waiting vehicle outside. But Costco’s store layout and receipts (and lines out of the store) make that approach very difficult to pull off.

Although things like laundry detergent and personal care supplies are targets for organized retail crime, if the goal is to sell the product online, stealing one or two at a time isn’t that profitable.

Even small and valuable items can be pocketed or hidden in carts and are generally displayed and sold in very large packaging that cannot be easily concealed.

In short, Costco is better than most retailers at controlling losses from retail theft, thanks to its core business strategies.



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