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Lax security one reason India places high on shoplifting index

Kaushik began shoplifting gum balls at age 7 and eventually graduated to carbonated beverages, books, expensive name-brand deodorant and hair gel, usually from high-end malls.

He didn’t need to swipe the merchandise; his family was comfortably middle class. But Kaushik, now 28, relished the adrenaline rush and his ability to look calm as his heart raced.

“It’s totally the thrill, the sense of power of hoodwinking the security,” said the New Delhi media employee, who would give only his first name, adding that he had quit stealing six years ago. “I had no moral dilemma, only concern over the legal ramifications if I got caught.”

Emerging global power India is proud of its fast-growing economy, ambitious space program and dozens of billionaires. One global ranking it’s less proud of is that of being the world’s leading nation in shoplifting.

A study of 43 countries by the Nottingham, England-based Center for Retail Research found Indian retailers reporting the highest amount of theft by customers, employees and suppliers, for the fifth consecutive year. With “shrinkage” taking a reported $2.38 of every $100, India is well above the global average of $1.45 per $100. By comparison, the rate in second-place Russia was $1.74 per $100, with the U.S. in 10th place at $1.59 per $100.

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The report, based on voluntary information from larger, multi-outlet retailers, is admittedly incomplete, said its author, Joshua Bamfield, who serves as director of the research center.

Still, he said, the results, which show India’s rate declining by 12% last year, accurately reflect the trend, scope and global ranking of the problem. “It’s not perfect,” he said. “But it’s quite good.”

Retail industry analysts, who said the report’s conclusions were consistent with their research, attribute the problem to such factors as lax security and a reluctance among business owners to pay for security cameras, electronic tags or professional advice in a country where labor remains relatively cheap and more than 90% of retail stores are privately held.

“The ordinary Indian mentality is that security isn’t a primary concern,” said Ramesh Iyer, managing director of Topsgrup India, a security firm. “Getting people organized and understanding the need is a mind-boggling task.”

Jai Gulati, an owner of family-run Empire Stores, a department store in downtown Chandigarh, points at a bank of closed-circuit television sets behind his desk and shrugs.

“The cameras are just eyewash to scare the customers,” he said, near displays of cosmetics and chocolate, among the most common items pinched. “We don’t have time to go through them.”

Empire’s losses are close to 4%, he said. The biggest culprits are regular customers, staff members and children whose parents pretend not to notice. “That means the parents are probably shoplifting themselves,” Gulati said. “Morality has gone way down.”

Many of India’s small privately owned shops appear almost Dickensian, their cash drawers jealously guarded by a family member, as low-paid clerks clamber on 10-foot ladders above retrieving dusty inventory. Then there is the so-called organized sector of well-lighted, more professionally managed stores, which is soaring, expected to increase 14% to 18% annually and hit $450 billion in revenue by 2015.

Malls have been around for only a decade, popping up as the middle class expands in a booming economy. That has left many retailers far more concerned with growth than with theft, analysts said.

The business boom has also created a shortage of qualified salespeople, somewhat counterintuitive in a nation of 1.2 billion people, while lingering caste issues make people think twice about such jobs.

“It’s social,” said Zahir Abbas, an analyst with New Delhi-based KSA Technopak, a management consulting firm. “Even if they’re without work, some people think it’s below them to sell shoes or underwear, although that’s slowly changing.”

The resulting job hopping, security experts say, has discouraged retailers from investing in staff training programs on theft prevention.

Often, in fact, the stealing is being done by delivery personnel and store employees, who are best positioned to exploit security loopholes. According to the British report, employees account for 25% of losses compared with 48% for customers.

Recently, Ashok Kumar, owner of Nirmala Garments, caught six of his workers passing inventory to accomplices in a waiting vehicle through a hole in his shop’s wall. “We’ve blocked the hole now,” he said. “But you must be vigilant.”

Corruption is a major concern across the spectrum in India. Several retailers said they rarely turn in shoplifters to the police, wary of demands for “tea money” to file reports and a tendency to seize merchandise as evidence that may not be returned. Another concern: Cases in India’s creaky legal system often drag on for years.

“Dealing with the police sometimes costs more than the goods are worth,” said Gurbir Singh, assistant manager with the Chandigarh branch of the Woodland sporting goods store. “We generally don’t bother.”

Instead, many seek to embarrass shoplifters, hoping to prevent a repeat, or force them to pay. Those caught by small shop owners and roadside vendors, on the other hand, may face vigilante justice. “The vendors often beat them on the spot pretty badly,” said Kaushik, the former shoplifter.

Poverty is extensive in India, but shoplifting nonetheless has more to do with kleptomania than lack of wealth, said Vishal Indlam, a psychiatrist at the Vijayawada Institute of Mental Health and Neuro Sciences in the southeastern state of Andhra Pradesh. “It’s often about getting a thrill or temporarily lifting your spirits,” he said. “Even big celebrities do it.”

Bollywood actress Rekha and cricketer Sudhir Naik were allegedly caught at it, joining the ranks of Hollywood actresses Winona Ryder and Lindsay Lohan.

More sophisticated scams involve customers in league with crooked cashiers, in some cases paying for two bottles of cologne but leaving with five. Alternatively, company drivers may remove 100 items from a warehouse but report only 80, selling off the other 20.

Stolen goods from the organized sector are often sold to small shops, where their origin is difficult to trace. In particularly blatant cases, shop owners have been found driving to malls after hours and “shopping” for stolen goods they’ve selected in cahoots with crooked store employees.

“Obviously human greed and weak controls drive all this,” said Shashank Karnad, a partner at consulting firm KPMG. “And many workers rationalize that it’s all right to commit fraud since I’m working all these hours and not earning very much a month.”

mark.magnier@latimes.com

Tanvi Sharma in The Times’ New Delhi bureau contributed to this report.


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