Illustration: Chen Xia/GT

Ever get the feeling someone is watching you when you are out shopping in a supermarket? In Shanghai's supermarkets that's not just a feeling. Stores, and supermarkets especially, are struggling to combat shoplifting and theft which, although taking up to 2 percent of the annual revenue of some retailers, is hard to quash.

Supermarkets arrived in China in 1983 and the Western-style retailing has boomed throughout the country. In Shanghai supermarkets flourished and competition was intense. But for the retailers the appeal of these large easy-to-shop, efficient, clean stores has been lessened considerably by the losses they incur from theft.

Sheng Yufeng is a "loss prevention officer" at a Tesco supermarket in Songjiang. He has been working there for two years and it's his duty to catch thieves.

"As well as dozens of 24-hour security cameras we have a lot of undercover security staff watching the customers. But we are losing property all the time," Sheng told the Global Times.

Sheng said summer was the low season for theft compared with winter when shoplifters could hide items in coats and wraps. But he said it was not so often a small instinctive crime these days. "Today more and more thefts are being carried out by organized groups and not individuals."

Store detectives like Sheng in supermarkets have an uphill battle these days. It's not enough to suspect someone of stealing. Security staff have to be 100 percent certain before they can apprehend someone. If they try to hold an innocent person, they could face criminal charges themselves or legal action from the wrongly-identified person. In reality if they make a mistake, they or the store will sometimes have to offer compensation to the victim.

"It's a real headache and it's like an endless cat-and-mouse game but there are no winners in this game," Sheng said.

Billions lost

According to statistics released in June by the Loss Prevention Committee of China's General Chamber of Commerce, the only government-supported organization leading with commercial loss in China, total retail losses in 2011 totaled 219.6 billion yuan ($34.47 billion), a year-on-year increase of 16.7 percent. The figure accounted for 1.55 percent of the country's total consumer retail sales.   

Most of these losses were incurred from theft, which accounted for 63 percent of the total losses - meaning 138.6 billion yuan worth of items were stolen last year. While the public were responsible for 46 percent of the thefts, staff were blamed for the rest of the thefts, especially cases where staff members colluded with members of the public to steal, which is an increasing trend.

"People usually think that it doesn't matter really how much is lost because it only hurts the supermarket itself. But our research shows consumers are actually the main victims of these commercial losses," said Cao Xiaoning, the director of the Loss Prevention Committee of China's General Chamber of Commerce.

According to the chamber's research, as competition in the retail industry became more intense, profit margins were cut to very low levels. So even small losses affect retailers much more these days and they try to pass on the losses by cutting the prices they pay to suppliers. But it is impossible for suppliers to absorb these cuts unless they cut the quality of the goods they supply. In the end the consumers pay one way or the other.

Different strokes

Just about every supermarket in Shanghai faces the problem of theft every day. Most supermarkets have tried a variety of methods to combat theft and shoplifting.

The Global Times checked several major supermarkets in the city and discovered that although the rate of theft differed according to the location and store management, preventative methods were all employed by those supermarkets.

A spokesperson for RT-mart Shanghai told the Global Times that although the rate of theft has declined in recent years, losses from theft accounted for between 1.5 and 1.9 percent of the company's annual sales.

"Originally it was a difficult process for our customers to adapt from over-the-counter trading to open-selection trading. Many people might have stolen something because they were unused to this or just on impulse," he said.

According to this spokesperson, supermarket thieves were more likely to be people with criminal records and could be pregnant or breast-feeding women, elderly or ill people. 

Several store managers with NGS supermarkets in Shanghai told the Global Times that supermarkets near residential compounds had a higher rate of thefts. But there was little they could do to deal with thieves. "We cannot search people without solid proof. Even if we catch people taking items without paying for them, they just shamelessly lie and pretend they forgot to pay," an NGS Pudong store manager complained.

The manager said there were no laws or regulations that meant shoplifters could be legally detained or punished. Sometimes they caught the same shoplifters several times and had to release them.

China's criminal law sets a limit of 500 yuan for theft. Only people stealing goods worth more than 500 yuan can be seriously punished. Shoplifters might be handed to the police who will take them to a police station and lecture them but will then have to release them.

Facing this problem many supermarkets have shifted the traditional open-selection trading back to over-the-counter trading for the more expensive items. So if you want to buy something expensive, you have to ask one of the store staff to get it for you. Like the old days.

Insider thieving

Theft from staff members is a growing concern as well at supermarkets. One of the major city supermarkets which asked not be named told the Global Times that one of their model staff members was uncovered as the thief behind a serious of thefts in the supermarket.

In July 2011 the store manager found several cases of items missing which at first he attributed to a miscount. But at the end of December the manager found some 10,000 yuan worth of goods were missing. This was reported to the police but an investigation revealed nothing out of the ordinary after the security video tapes were checked.

But while the police were investigating, a staff member suddenly left work. He was regarded as one of the hardest-working employees at the store and he walked out without giving a good reason. This attracted the attention of the police who tracked him down and interviewed him.

He confessed that he was responsible for the missing goods. He had taken advantage of his position as supervisor of the frozen food counter and used to go to work earlier than anyone else when he could hide items in his locker unobserved. He would stay late and when all the other staff had left he would take the stolen items out of his locker and take them home. 

To his colleagues he seemed to be extremely hardworking and even won praise from the manager. He told the police that having got away with stealing small amounts he grew bolder and removed not just frozen food but other items as well. By the end of his spree he couldn't remember how many times or exactly what he had been taking. When the stock-take revealed how much was missing and the police were involved he became frightened and decided to leave quickly. He said that if the police had not been called, he would probably still be thieving. Over six months he had removed more than 50 kilograms of quality consumables.

Most supermarkets said they would immediately fire any staff member caught stealing. "This is against our principal company culture, which is based on honesty and integrity. We have zero tolerance for this," said He Wenyin, public relations manager for Wal-mart Shanghai.

Public shaming

The Nanjing newspaper the Yangtze Evening News reported last year that the Auchan supermarket in Nanjing had begun posting photographs of shoplifters on its office wall beside the supermarket where the public could easily view them. The rate of shoplifting declined sharply and the move won support from a number of people.

Professor Chen Donghong from the Business School of Nanjing University was one of the supporters: "Why did the previous penalties have little effect in preventing thieves repeating their crimes again and again but publicly shaming them worked? This is not hard to work out. The penalties for stealing things are not enough to prevent them doing this again and again, but being shamed in public is costly for them personally. Why can't we use this shaming technique more often to curb this ugly phenomenon?" he asked.

But Professor Han Yugeng from the Law School of Nanjing Normal University came out against this technique.  

"From the legal perspective, only law enforcement authorities and courts should be able to control a person's behavior. A supermarket is not a law enforcement agent and so it should not have the power to punish a thief. Posting pictures of thieves is a violation of these people's rights to their reputation, name and appearance," Han said.

"If the thieves sued the supermarket for defamation, the supermarket would lose. The real problem for supermarkets is that they have no support in law so they have to find other ways of fighting crime when it recurs time and time again."

Han said it's now urgent that legislators drafted new laws specifically for shoplifting. "Supermarkets have been in China for nearly 30 years. However, there are still no effective laws and regulations governing theft in supermarkets and this is completely contrary to modern retailing management systems. We look forward to seeing this change," he said.