The mass chase, which lasted almost half an hour, took place after staff at the Harry Tuffins store in Knighton spotted three men acting suspiciously.
Staff contacted police, who tried to question the men before they attempted to escape in a nearby van. Police officers managed to arrest two of the suspects but a third escaped, triggering the chase.
The group followed the suspect through streets and over garden walls before he was arrested with the assistance of local residents, shop staff and an off-duty police dog handler.
Police have also appealed for help in tracing the owner of a large quantity of alcohol discovered in the gang's van.
Harry Tuffins managing director Paul Delves told Conveneince Store: "Quite a few people were involved in the chase in the end. The staff recognised the shoplifters from some previous incidents so they contacted the police. Two of the suspects gave themselves up pretty quickly but the third tried to do a runner.
"The police told us we shouldn't have got involved in a chase but people are a bit different here and like to look after their own. Everyone is very community minded and teamed up to sort it out. I know the store manager Neil had to jump over quite a few garden fences!"
PC William Cowan told local press: "Chasing or following potential suspects is not something police would encourage but the local community are thanked for their assistance because the person who ran off might not have been caught without their help."