An outbreak of retail dishonesty

 

Deep dive on a ‘news’ item: shoplifting

https://www.bbc.co.uk/news/articles/cp82jvd3g54o#comments

A summary of the story (should the BBC ever take it down) is this: shoplifting is estimated to have risen significantly over the last year. It costs the consumer money. Some awful examples are cited. Security staff and shop workers are also suffering more abuse than ever before. The police response is insufficient.

There were 275 comments when I checked as I am writing, and the vast majority are along the lines of ‘how awful: something must be done’, with many agreeing that the police should act more.

I think that a sensible understanding of the article will create a somewhat different opinion, and I hope to show that here.

1.       ‘Retail crime is "out of control" and shoplifters are carrying out increasingly brazen and violent acts of theft because they do not fear any consequences, an industry body has told the BBC.’

The introduction to the story gives the game away at once: I expect that this would make a great GCSE English case study, so obvious is it. ‘An industry body has told the BBC’ could mean a few things. It could be that the BBC has found a press release and is citing it; or the industry body could be being more proactive.

We see next that ‘The figures were published today in the annual crime survey from the British Retail Consortium (BRC)’, and yet the BBC has clearly had some contact about these figures with the BRC and other organisations, and the story was published at about 6am. The way these things work is that an early version is shared with outlets so that they can draft stories about the press release. This contributes to a ‘big bang’ effect and PR people love it. I don’t understand why you can’t publish completed analyses and then ask news organisations to use them after publication, but I’m sure it’s helpful for spreading messages, for some weird emotional reason that PR people fully understand.

Anyway, the key message here is that the message is coming from the retail industry, not an unbiased commentator.

We could also note that the BRC represents ‘more than 200 major retailers’. It does not explicitly claim to represent small retailers, and if it did, it would probably cite the number, since ‘thousands of businesses, including major retailers’ is a more impressive description. We know that everyone, especially those with PR teams, like to present themselves in the most positive way, so it’s strange that it doesn’t cite the ‘thousands of smaller, independent retailers through a number of niche retail Trade Associations that are themselves members of BRC’. I wonder how closely they work together. The BRC does claim to represent over 70% of retail trade volume, but given that most things in life follow the 80-20 distribution (80% of trade is done by 20% of the shops), this is not so impressive. Especially when you note that the BRC includes Amazon, and online retail. This must mean that a lot of small/individual physical shops are not represented.

This is not a major concern, but it is an interesting thing to remember for later.

2.       ‘In the 12 months to September last year, incidents of customer theft in the UK rose by 3.7 million to 20.4 million, and cost retailers £2bn.’

On this occasion there’s not too much problem with the numbers themselves, although that could be because there’s no methodology to pick apart. Let’s just recite the usual doubts and be clear what’s going on here.

    This is likely intended to mean that between Sep 2022 and Sep 2023 there were 16.7m incidents of theft; and that between Sep 2023 and Sep 2024 there were 20.4m (a 22% rise). These are not precise numbers extracted from a database: they will be estimates, and it is entirely possible that an industry body with an axe to grind has neither the statistical expertise nor the motivation to get anywhere near a reliable estimate. And by nowhere near, take it from me that people can be vastly wrong when doing such things, not just a few percentage points. I have seen errors that make estimates orders of magnitude wrong.

    These estimates are described as ‘incidents of customer theft’; this seems like a category term that is the broad one they use for all types theft. They no doubt have separate terms for ‘theft with violence’ or ‘burglary’ (although one might argue that a burglar is not even a customer).

    What else has been happening over these two years? What might account for this change? The BRC does not mention, and the BBC does not bother considering this either. It’s left to the reader, and one’s biases will contribute. Some right-wing nutters might think it’s about the breakdown in law and order since Labour took power, after these periods were over. Or about the general deterioration in society that needs a strong man like the fat clown Johnson to resolve. Some left-wing bleeding hearts might ponder whether the cost of living crisis caused by Conservative austerity and corporate profiteering has pushed desperate people over the edge.

I want to raise two other possibilities:

a)       Footfall in shops has been increasing anyway, due to bounceback from CoViD restrictions and economic growth; and

b)      The way that shops and shopping operate has changed in this time.

If shoplifting relates to footfall, then it will naturally increase as shopping increases.

We should also consider the £2bn cost. The same question about its reliability exists, but on top of that, cost is a broad concept. We might assume that this is the total price of stolen goods, but I doubt it. People always want to present the most impressive figure that they can, and the word ‘cost’ might include security measures, cost of investigating and co-operating with police, cost of restocking empty shelves etc. In an ideal world it would be the purchase cost of the goods stolen plus the usual share of overheads, with cost of investigation, or additional security measures deemed necessary, added and reported separately, since neither additional security nor investigation are strictly a necessary cost of shoplifting. I suspect that £2bn is the sale price of the goods plus as many other costs as could possibly be added.

3.       Extreme examples

The report then says ‘violence and abuse against shopworkers also rose by 50%, with more than 2,000 such incidents recorded on average per day’ (and later cites Mitie, that supplies security guards to large retail companies, saying that 10% were injured on duty in 2024) and dives almost immediately into an example of two men kicking down a phone stand in front of customers and shop workers. This sneaky justaposition is deliberately misleading. ‘Violence and abuse against shopworkers’ is a category unrelated to shoplifting, although there will be some small overlap. There have been campaigns in shops to encourage staff to report this, and abuse can be caused by all sorts of things, such as poor service. A poor customer experience is unlikely to be the result of a low-level customer-facing employee. Such people tend to be trying their best, hampered by unrealistic expectations from both employer and customer.

I merely mention poor service because I’ll pick up on the idea later. Let’s be clear here that violence and abuse against shopworkers does not belong in a report about shoplifting, unless and until the BRC is clear about the level of overlap of these two very different things. Theft is not a violent crime.

We are even told that the Met did respond to the phone stand incident, despite the assertions later that ‘we need to see more resources and more focus by the police’.

We then see more shoplifting coverage, and as is the way with news, it is extreme examples that are newsworthy. A small shop was robbed by a woman who assaulted the owner… and Cambridgeshire Police arrested and charged a girl with assault and theft. Yes, we sympathise with the owner and the injury to his face from her punch. But he is one man, not an average of a whole industry’s experience.

The justaposition between his picture and the Mitie report of 10% of 10,000 security guards getting injured is again deliberate deception. Any well-run organization keeps good enough health and safety records to know the general causes and circumstances of injuries. I know that injuries can be logged in safe office environments; people hurt their backs lifting things, report paper cuts because they want a plaster from the first aid box, or simply trip over. If these happen to office workers, they can only be more common in security guards.

Mitie does not tell us that 1,000 people were injured by shoplifters. This statistic is an outright attempt to deceive us. We are even told that security guards do not have more powers to arrest than ordinary citizens, that staff safety is prioritized and that guards are a deterrent only. So not really tackling, literally, massive numbers of violent shoplifters.

4.       Numbers in context

    The very first hit from searching for relevant information says ‘Retail sector economic output was £110.4 billion in 2023, 4.7% of the UK's total economic output and a 2.2% increase on 2022. There were 2.7 million jobs in the retail sector in 2022. There were 324,995 retail businesses as of 1 January 2024.’ This is a research briefing from the UK Parliament, which will be compiled using reliable statistics from the ONS as much as possible. I can’t be bothered to check the numbers; I trust this source enough for this purpose. The ONS is the top of the pyramid when it comes to national figures.

    If we compare growth in retail to growth in shoplifting, we see that shoplifting grew ten times as much. However, the £2bn (likely overestimate) still amounts to only .3% of total sales of £517bn. We know that fraud in industry is often estimated at 4-5% of revenue; it’s a major problem for industries and individuals. If we include false advertising and shoddy products/services, it’s easily more than this. Corruption and lobbying similarly extracts significant percentages of national output for small communities. For example, HS2 will cost over £100bn and benefit a few consultants and development organisations, but not benefit the taxpayer at all. Or, even more corruptly, freeports are a guaranteed way to allow a small number of organisations to dodge taxes and make money, and they conveniently support the Conservatives who touted the idea.

    In context £2bn is a lot of money but not as big as other losses we accept as the everyday consequences of there being a lot of money flowing around.

    We can also see that ‘>200 retailers’ is not very impressive when there are 325,000 retail businesses in the country! This is a subset of retail, and even if it has members indirectly via other trade associations, it will be biased towards its more direct members.

The split between physical and online purchases is very important. According to the same Parliamentary briefing, total retail has been broadly stable for a few years (increased 1.4% from 2023 to 2024), with 57% of sales being liable to shoplifting (I’m adding up the physical categories but leaving out petrol sales). And yet non-shop sales ‘generally fell in 2022 and 2023’ and have ‘generally fallen since February 2021’. It seems that physical footfall, if it has risen, hasn’t risen anywhere near enough to account for a 20% rise in shoplifting, but it was worth thinking about.

Finally, let’s think about profits. Tesco in its October trading statement estimated that profit for the financial year 2024-5 would be £2.9bn, a 15.6% rise on the prior year of £2.76bn. This is the biggest supermarket, and supermarkets are the biggest part of retail, but still! This one retailer alone has enough spare cash to cover the shoplifting losses of the entire industry. Profits are increasing well above inflation despite the claimed losses to shoplifting. The industry’s profits are very important to bear in mind when we consider the next two points.

5.       Background context: cost of living

    Two major factors are important, and are widely-known and mentioned elsewhere. Firstly, the cost of living has increased a lot; prices of basic necessities are now a lot higher, even if general inflation has remained low due to better cost control in manufacturers of large expensive purchases such as cars. Secondly, and linked to this, customer behaviour has changed, with people making smaller trips for specific items rather than facing one massive grocery bill in a comprehensive weekly shop; and customers have also flocked to lower-cost retailers with fewer staff and less product choice such as Aldi and Lidl.

6.       Background context: self-service tills

This is probably the most important consideration of the entire analysis. Staff cost money, so swapping out shop assistants for automated tills can cut costs and create profit. Staffing is typically the biggest cost for any organization. Some high-throughput organisations transfer a lot of goods using few staff, but for most companies it just costs a lot to pay people to do the work of actually being a company.

Self-service tills have their downsides. The customers have to do the work of scanning, and customers are not trained. They will be a bit slower, they might resent the work, and the security systems in place, such as the dreaded ‘unexpected item in bagging area’ frequently get it wrong, annoying us all the more.

And one inevitable consequence of trusting the customer to scan is that customers will get it wrong… and possibly even deliberately get it wrong. With one staff member running around resetting scales that are expecting a heavier product (presumably because the item is underfilled in some way and the customer getting bilked) other customers are free to pass off one item as a cheaper item, or to ‘forget’ to scan something entirely.

This is where the massive increase in shoplifting is coming from. Another simple search online confirms it. Deloitte (not known for standing up against big corporations on behalf of the little people) reports that ¼ of losses up to 40% were from self-scan technologies at the beginning of 2023. It’s not a sudden outbreak of violence: the cited examples of people smashing up a phone shop or assaulting a small businessman are not the majority of ‘incidents of customer theft’. In fact, theft is a non-violent crime! These are looting and/or assault. Customer theft is overwhelmingly people quietly taking stuff, and the rise is almost certainly people sneakily taking stuff at the self-service till, free from the watchful eyes of a checkout clerk. There are hints in various reports that organised crime is an important contributor too, but this is probably as easily tackled through other avenues (I doubt that a police presence in your local supermarket will catch bigwigs of large criminal enterprises). Still, I don’t want to pretend that there aren’t other leads that are indeed valuable.

Right at the end of the piece we see that this is supported by another retail association member: ‘We've been encouraging our members to report the incidents but a lot of them just don't bother reporting’. What is there to report when your only evidence is that your stock is lower than your records say it should be? Of course the police won’t be able to do anything! Shoplifting isn’t going to be improved by reporting stock discrepancies to the police, so no-one will bother.

Finally, self-service tills are only used by large shops. The small shops that the BRC does not represent mostly rely on the shop owner to manage transactions with customers. So of course the BRC is going to think that the increase in shoplifting is a major issue, when compared to all the other shops out there. It is possible that their extrapolations from a survey of their own members to the entire industry overlooks this, making their estimates wrong.

7.       The message we’re supposed to believe

All this deceit and adduction of misleading or irrelevant figures has been to support the final point: ‘Helen Dickinson says the latest record levels of shoplifting should serve as a "wake-up call" to the government and the police. "… I think that's why we need to see more resources and more focus by the police"’.

Retailers want police involvement because security guards cost money and the police don’t directly cost them anything. Police involvement might even be a little more of a deterrent. The BRC has added up all the costs it can possibly attribute to shoplifting and decided that each of us could save £133 a year if the police were involved… except we couldn’t.

First of all, that will not all go away. Most of it is sneaky theft, and the police won’t stop any of it. Secondly, the police are expensive. Substituting trained police officers for low-wage security guards will cost the taxpayer a lot of money. It will not magically make us all richer: it will force the police to avoid investigating far more important crimes that harm us all a lot more, all in favour of absorbing costs for private businesses.

They tried this before: the internet retains the ‘news’ articles about a shoplifting epidemic in 2023, but they were a little more honest. This time they’ve thrown the full scare-mongering kitchen sink at their pet issue to try to sway public opinion. I think a windfall tax on retailer profits would be an appropriate response to such manipulativeness.

Retailers, through price rises and cost cutting, have created the circumstances that allow and even encourage more shoplifting than before. It is a natural consequence of their choices. Is it ideal? No, I’d prefer that everyone were entirely honest and no-one ever broke the law. Such as the Tesco false accounting scandal, misreporting finances to the tune of £263m (that they admitted to)… No dishonesty is ideal. Let’s start to correct things where we can, with deceitful and manipulative press releases.

Is fraud academic? Honestly!

 

I was listening to a podcast about fraud in academia which resonated with me. I left academia behind, not because of any fraud that I had seen (in the strict sense; there were some I knew of, but did not know, whom I might describe as ‘old frauds’ in the sense that their pet theories and work supporting them seemed unworthy of their reputation; not because of dishonesty but because the results reported seemed insufficient), but partly because of the incentives I saw for dishonesty.

              As some of the interviewees noted, there is massive incentive to commit fraud in research: a relentless focus on interesting, positive results, little penalty for being caught out and a career environment heavily focussed on status and reputation as judged by publications and excitement generated.

              The presenter, Stephen Dubner, admitted that he had thought of academia as the last bastion of rational respectability: an outpost of dedication to truth. He was disappointed to be presenting the various findings about the sector and the few well-publicised stories of confirmed academic fraud.

              I think that he was right. Academia is indeed an outpost of dedication to truth. The fact that researchers and statisticians looking into academic fraud think that 2% is a lower bound for academic fraud is remarkable not because it is so high, but because it is low. Academia is a career one undertakes at least partly from love of research and a commitment to seeking truths. The incentives to commit fraud take gradual effect, as documented by a couple of confirmed fraudsters and the people looking into academic fraud. They explained that, as with so much wrongdoing in all walks of life, it starts off minor; pushing things here and there, picking the ‘best’ of three rather than taking whatever result happens, filling in a blank when one test in a series failed, trying to meet targets to get good work done, avoid blame for another experimental failure, look good in front of lab leaders and colleagues and not let people down, and ends up in falsifying whole data sets.

              The incentives to commit academic fraud are simple to understand. It’s a high-pressure world, in which only interesting results get published and publications in more respected journals determine the fate of one’s career. Negative results (‘we looked into this and found no effect’) are not valued. Academic review is a theoretical concept, but promotes sticking to established theories, and rarely looks in detail at all the experimental detail. Not that review of a manuscript could detect all forms of fraud: if I say I did something and make up the results well, it’s impossible to know I’m lying just from my own report about it. Reviewing papers is unpaid and takes a lot of time which must be on top of a day job. No-one is paid to review.

              Respect and career advancement come from lying; there are no established processes to detect lying and if someone is caught there are often (but not always) minimal penalties, as the employer wants to avoid the reputational damage; it might not be clear whether it’s truly a lie, or incompetence or error; and one instance might not seem so awful. This means that anyone doing completely honest work is at a major disadvantage.

              When I describe it in broad generalities like that, it should be obvious that academia is not special. Our entire economy works off people writing CVs with minimal references, or else references written by helpful friends who got along well with the candidate. There are established jokes about seeing through phrases used in academic papers and CVs: highfalutin language disguises a very mundane reality.

              The difference between academic and more generic careers is that academia involves a certain love of truth and desire to discover facts. Other jobs are far more simply getting money for one’s time. So we should expect the estimate of academic fraud to be lower than fraud in the wider world of jobs.

              Fraud in the rest of the economy is estimated, but these estimates refer to crimes such as diverting funds to the incorrect bank account. Fraud is 38% of all reported crime, and it is estimated that only one in seven cases are reported. Reported frauds cost individuals £1.2bn; almost 3,000,000 cases of fraud were reported in 2023.

              Another estimate puts total losses in the economy far higher than the reported figures: £219bn. This report admits that its estimate is only that, but notes that because businesses prefer not to publicise being the victims of fraud it is hard to get solid data to improve the estimate. The vast majority of this amount is an estimate of procurement fraud, at about 4.5% of expenditure.

              The detail of all this is interesting, but not the point here. 4.5% is indeed higher than the 2% given as a lower bound in academia. Yes, these are different things: academic fraud is about one’s own achievements and results, but they do blend into each other. For example, included in procurement fraud is simply under-provision of goods or services: i.e. making greater claims or promises than actually delivered. Which brings me onto a familiar subject.

              Is it likely that people are willing to defraud others in a business context, but draw the line at doing so on their own behalf? Only if there are significant penalties that they do not mind their employer experiencing but object to suffering themselves. It seems likely, given the rewards on offer (better jobs giving more pay and more experience for future jobs) that the fraud rate in business can be extrapolated directly as a lower bound to the fraud rate in employment.

              ≈5% might seem like a small number. Does that not mean that 19 out of 20 people are honest? Firstly, I think this can safely be taken as a lower bound, given the incentives and penalties. Secondly, how many applicants are there for most jobs? More than 20? If you take the most impressive 3 CVs to interview, it’s incredibly likely that you get at least one dishonest one.

              The first response might be to say “That’s what the interview is for”, but let’s stop for a moment. Are interviews really designed to detect fraud? Many people fancy that they are insightful, but are they insightful enough to detect all lies? Are interviews really carefully thought-through to provide the best chance of detecting falsehoods, or are they an onerous burden on rushed managers who are already too busy (or else they wouldn’t be recruiting staff to help!)? And even if interviewers attempt to detect fraud, rather than to establish rapport and use liking as a (truly terrible) proxy for trustworthiness, is it possible to do so with a few questions? I aver that accurately assessing skill, ability and potential in interview (or other forms of recruitment) is itself a skill that needs to be learned and practiced; and yet most people have not studied it nor had anything more than perhaps one brief session from HR (who themselves might not know much) to prepare them for it. Interviews, like academics reviewing papers, are an extra piece of work one must do on top of one’s core expertise.

              Of the hundreds of interviews I have had, only two had a chance of detecting if I was lying. When I put it like that, I am disgusted with myself for not making up more achievements. I have known people who outright lied: gave themselves job titles and roles they did not have; or claimed to have known subjects they merely knew of and expected to be able to learn quickly; or claimed experience which would have been professional malpractice given their role and seniority. In all these examples the person got a good job off the back of such statements.

              I, however, have said things such as “I can learn that really quickly” or “My experience auditing large numbers of accounts and backing files means I could easily prepare accounts”, but interviewers seem to have wanted straightforward “yes, I have that experience”.

              And if we have a few dishonest people with insufficient skills or dedication to doing a good job in positions of power, we will be even less likely to have interviews go well; they will be run by people who are in over their heads whose self-regard depends on the idea that salesman-like rapport and confidence are legitimate and important qualifications for doing the job, even beyond the standard bias that humans have that mistakes such things for ability.

              What are the results of such a problem?

              In academia, where results are measurable facts and theories, we can also see the effects of fraud. For example, one known fraud was a German anaesthetist (American: ‘anesthesiologist’) who claimed that a blood substitute for people receiving dialysis or transfusions was effective, when it turns out that it is harmful. His self-belief and trust in the underlying rationale for the product led to outright fraud and an estimatable number of deaths (ill people might have died anyway, so it is an estimate rather than precise figure).

              In another example discussed in the podcast, psychologists claimed that putting the signature at the top of a form rather than the bottom increased the likelihood of people telling the truth in disclosures, and businesses and government invested millions of dollars in schemes to use this finding in things such as tax returns or insurance disclosures. Eventually someone assessed the effectiveness of their scheme and the original research was found to have been made up.

              In business, the results will be no smaller. But because we do not assess the results of employment fraud, there is no easy reference. Many of us will have seen someone awful at the job needing massive oversight; a large amount of my time in some jobs has been making the best of mistakes and error-ridden data created by an organisation that is rolling along on estimates and hopes when real data and accurate figures ought to be available.

              The risk from underqualified people is not in obvious, discrete losses, but in hard-to-track effects. Decisions made by senior staff using rough estimates which they assume are reliable information. Risks needing detailed understanding to manage materialising and being explained away as unforeseen problems that are bad luck. Organisations don’t just fail because one person draws a salary and does nothing at all; or because an incompetent staff member spends a lot of money on a specific thing that is a complete waste. Organisations fail because each moment of incompetence is a small bit of grit in what could be a well-oiled machine. There are other sources of grit, and organisations that are not well-designed at all, and organisations that have little capacity for disruption, but the more grit, the more likely an organisation is to fail.

              We now have in top positions across all sectors people who thrived in an environment with massive incentives to lie; an environment which rewarded the ability to smarm one’s way into a stranger’s good graces over any job-related ability; an environment that allowed confidence and self-belief to be better than humility or clear-headed self-knowledge. Did they thrive because of such an environment or despite it? We cannot know without knowing each of them, and their personal history, in detail. But we can guess that across the whole population, they will tend to have those ‘beneficial’ traits more than the people who didn’t thrive.

              Is the solution to parachute more women or black people into top roles? Of course not! We have been talking about human nature and a national systemic problem; race and sex have nothing to do with it. Yet some people propose this as a solution. I think we might as well send 18 year olds to run multinational companies, since people in power also tend to be old. Young people will be less likely to have been corrupted by gradual exposure to a corrupting world; and the hard detail will have been summarised by expert staff. There is more in favour of this idea than picking on women or ethnic minorities. Yes, people in good roles learn more than people who do not get them, and so those lucky 18 year-olds will soon become genuinely more knowledgeable, but a lottery is better than a system that actively works against virtuous people.

              People who value confidence, ‘judicious’ dishonesty and charisma will recruit people like them. Because we give them a pulpit, if such people were in power, we would end up with self-help mantras such as ‘just believe in yourself’, a self-serving piece of advice which protects their ego more than helping the world… although in world where humility is a disadvantage, it could also be good advice.

              The solution is for some of these people; the slightly more sensible, balanced ones, to learn on the job as they have done throughout their careers so far, and change what they value now that they have the power they were chasing. Shareholders, journalists and the wider public should be actively suspicious of people in very senior roles rather than treating them as more respectable and insightful. Anyone who deserves the position should easily prove themselves worthy of respect through their behaviour and insight; those who have only experience and anecdote, valuable those these might be, do not deserve platforms or adulation.

              Anyone can learn experience; anyone can accumulate anecdotes; almost anyone can learn to be virtuous (although many might be so only out of conformity, rather than a deep desire to be moral). If we want to invest in people by giving them roles beyond their current, official, abilities, we should look for insight; speedy assessments of novel situations. Not coincidentally, the Civil Service entry test, which was once the gold standard for selecting able applicants, did exactly that when my mother ran it. News cuttings, reports, performance data in a pile and the task to decide how hospitals were performing, or where funding should be directed. A lie on a CV, or a charismatic character, cannot help with filtering through such things.

              No-one enjoys exams. They are stressful. Talking to people in a chat feels nicer. It feels nicer precisely because there are no hard data points generated; precisely because one can avoid exposing weakness; precisely because it can feel friendly. All the reasons it feels nicer are the reasons why it is worse. Until recruitment (except for sales positions, where being a pushy spiv is often a genuine qualification) uses tests by default, companies will be that much worse: 5%, or probably much more. And that’s a big difference in a supposedly competitive world.