Why does theft increase the prices in stores?

Question

I heard that theft increases prices in stores, is it true and why does that happen?

Answer 1

The store has to purchase the merchandise from the wholesale supplier before it can sell that merchandise in the store. If the merchandise is stolen, the store will be unable to make a profit, therefore the store passes the loss on to the customers in the form of increased prices.

Answer 2

Retail stores (like The Gap or 7-11) buy their items from wholesalers and sell them to customers for a higher price, the difference is called profit. Out of this profit, they must pay their employees, pay overhead (like electricity, heating, etc), and any fees or insurance. If there is no money left over, the store will eventually go out of business.
When something is stolen, the owner not only loses the profit but also the original cost of the item. He can try to prevent this by hiring security (which costs money), paying employees more (to deter theft by them), or he can have insurance pay for it, which would increase his insurance rates. All of these reduce his profit.
And it doesn't take much theft to significantly raise the price of every item in the store.
"An average family of four will spend more than $440 this year in higher prices because of inventory theft," Hollinger said. "Thieves also generally target hot selling items, which means those must-have toys on your child's holiday wish list are less likely to be available on the store shelves."
Businesses in competitive industries, such as clothing sales, have profit margins in the single digits. Say that a store is making 5% on selling t-shirts, it makes $1 for every $20 t-shirt it sells. So, if it sells 100 t-shirts a day, it will make $100. But it has to pay its employees $50 and overhead of $25, leaving $25 in net profit. But if one shirt is stolen, its net profit drops to just $5. To compensate, it will raise the price of its shirts to $21. Now it only sells $80 t-shirts, because they are more expensive, but makes 160. Subtract expenses and it makes $85. But it has a t-shirt stolen, so that is back down to $65.

Answer 3

Example:

You buy 100 Britney Spears CDs at $5.00 USD each.
You sell them at $5.50 USD each and you make a 10% profit.

If just 1 is stolen then you lose the profits from 10 CDs and you only make money on 89 of them.

If just 2 are stolen then you lose the profits from 20 CDs and you only make money on 78 of them.

As you can see. If enough CDs are stolen then you lose money on the entire shipment.

Obviously the store cannot sell 100 CDs and don't make any money.

That't when your price goes up from $5.50 to $9.99

If criminals stealing CDs where punished by Death (Like in other countries) then your CDs would cost only $5.50

Answer 4

Who do you think will pay for the stolen goods and added security? You me and the rest of the paying public!

Theft hurts every one!

Answer 5

Uhhmm its a marketing tool. Many people see something that is 4.99 as being $4 rather than $5, or at least they rationalize it like that..

Answer 6

because when something is shoplifted, the retailer "loses" out on the cost of the item, as well as the markup... so they have to raise prices on remaining inventory to cover their costs.

Answer 7

overhead goes up.
they lose merchandise...they have to charge more...

your car insurance..you have accidents----your auto insurance repairs damages--your insurance rates go up--why?
company lose money-you pay increase cost--and so does other drivers,,,,if that insurance company takes enough hits..
all rates go up..

Answer 8

I'm surprised that Avtar is not blonde, because you are really dumb.