Shame and Shoplifting at Wal-Mart

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The company authorized its store managers to prosecute first-time shoplifters as young as 16, compared with the previous limit of 18. A company spokesman, David Tovar, says, "We [lowered our prosecution guideline] in response to suggestions from our associates."

Technology's Limits

The challenge is in striking the right balance between making stores welcoming and making them secure. By its very nature, the retail business is one where companies try to create a warm environment where shoppers can touch, feel, and try out merchandise. Stopping customers from getting too close could end up driving them away. "To keep shrinkage low with metal detectors and security might be a draconian environment, like going to the airport vs. going to the mall, which encourages shopping with its fountains and music," says Richard Hollinger, professor of criminology at the University of Florida, who conducted a recent survey on retail shoplifting with the National Retail Federation.

The retail industry, from Wal-Mart and Target (TGT) to Sears Holdings (SHLD) and J.C. Penney (JCP), has tried fighting back. In recent years, retailers have upgraded their technology and joined a shared database with law enforcement agencies to reduce shrinkage. But the rate of loss remains consistent. According to the National Retail Federation/University of Florida study, shrinkage as a percentage of sales ticked up to 1.61% last year, from 1.60% the year before. "Despite our best efforts we haven't managed to reduce the rate of crime—and that's because we are in the business of opening our doors to people," says Joseph LaRocca, vice-president of loss prevention at the National Retail Federation.

Another Progressive Move?

Attalla is a microcosm of the challenges. The town lies 60 miles northeast of Birmingham, Ala., and has a reputation as one of the state's more progressive towns. It claims to have been the first U.S. city with electric streetlights. Once a large railroad hub, Attalla has struggled in recent years. The median household income is $28,600, about $8,000 less than the state average and $18,000 less than the national average.

And shoplifting has been on the rise. Judge Robertson says that in the last 15 years, the number of incidents in his municipal court has tripled. Wal-Mart, a longtime local presence, is bearing the brunt of that. "Out of the 10 cases or so that we handle every week, 80% takes place at Wal-Mart," says Robertson.

Since Robertson took action, he has had the whole-hearted support of local politicians. "Shoplifting is an epidemic in large stores and there's got to be some deterrent to the offenders and to others," says Charles O'Rear, Attalla's mayor. "Our judge found an innovative and effective way to make public spectacle of these thieves, and when they decided to use this form, I endorsed it."

Questionable Efficacy

The approach is not without controversy, though. Some critics say that wearing an embarrassing sign amounts to cruel and unusual punishment, although the accused in Attalla typically have the choice of wearing a sign or serving time in jail. Other legal experts question whether the punishment is even effective. "Judges are in a poor place to measure general deterrence, and it is purely speculative to suggest that shaming is a marginally more effective general deterrent than other available alternatives," says Dan Markel, assistant professor at Florida State University College of Law. Markel points out that in one well-known case, an offender went back to stealing mail after having to wear a sign board that read "I stole mail. This is my punishment."

Even Wal-Mart has tried to put some distance between itself and the practice. Although Hawkins, the local store manager, had approved of Fithian's punishment and agreed to have her stand outside his Wal-Mart store, headquarters wasn't sure that was such a good idea. Immediately after Fithian's first day of shaming, Wal-Mart said shoplifters would no longer be allowed to wear the signs on store property. Spokesman Tovar says in a statement: "While the punishment is likely a deterrent to shoplifting, we have communicated with the judge that moving forward, we would prefer that these actions not be completed on store property. We do not oppose the use of wearing the signs, but we think it should take place on public property—like at the Courthouse—and not on our property. We also feel that the sentence should be supervised by law enforcement. Our associates should not be involved in that process."

Judge Robertson is convinced that the shaming punishments are beginning to take effect. "My job as judge is to cause a change and try to deter such crimes from happening in the future," he says. "When I offer them the sign in lieu of the fines, the person always drops their head in shame and I've always felt that it's a sign that they acknowledge something. If you pay a fine, you don't really accept your guilt."

Gogoi is a contributing writer for BusinessWeek.com.