Playing Defense

Retailers are a gregarious bunch. They want to attract people to their stores, show them cool, desirable things, provide them with an enjoyable shopping experience and, as much as possible, give them what they want.

“We know our own business,” said Craig Maske, general manager of Sherlock’s, a five-store operation headquartered in Marietta, GA. “When I see a ten-foot-tall display, I’m thinking that’s great, it’s so eye-catching, it will really sell the product.”

But, he continued, “When Bill sees it, the first thing he’ll say is, ‘People are going to steal you blind because they can hide behind it.’”

Bill is Bill Bregar, president of Loss Prevention Systems (retaillosspreventionstore.com), the Atlanta-based loss-prevention consulting firm that Sherlock’s uses.

The kind of perspective Bregar has is a valuable one for a retail operation to consider. Retail crime can be a big problem. According to the Global Retail Theft Barometer, an annual study done by Euromonitor International, funded by Checkpoint Systems, American retailers lose, on average, 1.5% of their sales to theft. The two main sources of loss: employee theft and shoplifting.

“I cease to be amazed at what people will steal; they’ll steal everything, but they are not reinventing the wheel. What they do is look for gaps in your system,” said Sherlock’s Maske.

An Inside Job

For retailers in general, employee theft is the bigger problem. Employees tend to steal more than shoplifters do. According to a survey done by Jack L. Hayes International, a loss-prevention firm, the average loss per case for employee theft is $715.24, which is five and a half times more than the average for shoplifting cases, $129.12.

And employees tend to steal continuously, over time. “If you try to ignore employee theft, it is just going to get worse,” said Bregar.

And employee theft is very common. According to the Hayes survey, one out of every 40 employees was apprehended for theft by their employers in 2012. Bregar, who, over his 20+ years in loss prevention, has personally conducted over 2,300 employee-theft investigations, said, “When someone says to me, ‘Oh, no! My employees would never steal from me,’ then I know the employees are stealing, because the employer has stuck his head in the sand and isn’t looking for it.” Bregar has seen family members and childhood friends steal from retailers.

What can be done?

“The biggest mistake retailers make is that they don’t start talking about loss prevention right from the very beginning,” said Bregar. “They’re not establishing the employee’s mindset correctly from the beginning.”

When hiring, retailers should tell potential hires that they are going to be doing background checks. “And then they should actually do it,” said Bregar. “Things like criminal records checks are easy and cheap to do.”

Sherlock’s has been certified by the state of Georgia as a “drug-free workplace.” In addition to having a written substance-abuse policy, educating both supervisors and employees about the subject and giving them lists of free drug-treatment and counseling centers, Sherlock’s is able to drug-test its employees at the time of hire and then randomly after that. “Someone who has a drug problem often develops a money problem, which can then lead to a theft problem,” explained Maske. (Workplaces that have been certified drug-free in the state of Georgia also receive a 7.5% reduction in their workers compensation premiums.)

To combat theft, retailers need to run a tight ship and let their employees know that they do. “You have to have a system of checks and balances,” said Maske. At Sherlock’s, there is a blind balancing system. At the end of a shift, a cashier counts his or her drawer down to $100 and drops the rest into a drop safe. Then, another person will balance the drawer, counting the money and checking that the cash, credit-card and check sales all match, and then a third person, a manager, will review and enter the data into the store’s accounting system.

Sherlock’s point-of-sale system, from Atlantic Systems, “has good management controls,” Maske said, and Sherlock’s makes full use of them. Transactions such as no sales, voided sales and taking and returning keg deposits require two people, one a manager, to avoid creating opportunities for theft.

Linking the POS transactional data with video footage from cameras over check-out lanes is becoming more common. With systems like these, the transaction data, what the cashier is ringing into the system, is superimposed on the video footage from the camera trained on the check-out lane. “To everyone around them, it may look like they are ringing up a bottle of Grey Goose, but they could really be entering a void or a no sale,” explained Bregar. If a retailer notices discrepancies in his operation’s cash or inventory, he or she then has the video and the POS information nicely linked up to examine.

Some security systems, such as the ones from3xLogic (3xlogic.com), can even be set to send certain kinds of transactions to the system’s “dashboard,” so a retailer can just click on a button for “no sales” and literally watch all the “no sales” that have been rung. 3xLogic systems can even be programmed to send an alert to the retailer’s cell phone, with the footage attached, any time a certain kind of transaction is rung, so that the retailer can review it seconds after it’s occurred.

All Hands On Deck

In terms of financial loss, shoplifting is the other big concern for retailers. According to the National Association for Shoplifting Prevention (shopliftingprevention.org), a nonprofit organization, one out of every 11 people has shoplifted. And these shoplifters report being caught an average of only once every 48 times.

Scott Dunn, deputy director of the New Hampshire State Liquor Commission (NHLC), said that the commission’s enforcement division, made up of almost 30 sworn police officers, receives reports of shoplifting from New Hampshire’s 77 state-run liquor stores on a daily basis. “We have even found that some shoplifters will take orders, from a restaurant or bar in New Hampshire or from another state, for what liquor to steal,” he said.

As with other crimes, said Dunn, shoplifting can’t just be eliminated once and for all. It is more a matter of constantly “deterring, delaying and detecting.” “People think that if they put a fence around a piece of property, for instance, they are preventing crime, but what they are really doing is delaying someone if they do try to steal,” he explained.

The constant deterrence efforts are important, however. “Studies have shown that 60% of all shoplifters return to the stores they’ve stolen from,” said Bregar, adding “And they bring friends.”

For retailers, though, a balance must be struck. “You can’t just lock all your products up,” pointed out Rich Mellor, senior advisor for asset production for the National Retail Federation (NRF) (nrf.com). “Customers need to touch and feel the products.” Experts say that, when customers can’t do this, sales plummet. “You lose the whole art of retailing,” said Bregar. “Presentation, of a product with a gorgeous bottle, like Arte Tequila, is lost when everything is locked up behind the counter.”

Luckily, however, one of the best ways to deter shoplifting is also one of the best ways to provide good customer service. “Making eye contact with people as they walk into the store and greeting them is the classic deterrence measure,” said NRF’s Mellor. “Now [the potential shoplifter] knows you know they are in the store and you know what they look like.”

Many retailers and loss-prevention specialists cite the WalMart greeter as an example of this tactic. And Mellor, who was once in charge of loss prevention for a jewelry business, suggested taking it one step further, by asking customers their names as part of the greeting. “Most people will automatically answer that question truthfully,” he said, “and now, that shoplifter is not going to steal because you know his name.”

Scott Dunn of the New Hampshire Liquor Commission says employees at the NHLC state stores are taught “the 5 to 10 rule,” which is if the employee is within five to ten feet of a customer, they should greet them and, if 10 feet or more away, they should make eye contact.

At Sherlock’s in Georgia, store employees wear uniforms. This not only makes it easier for legitimate customers to find someone to ask for help, but shows potential shoplifters that the store is well-staffed.

Shoplifters, Bregar said, come in all shapes and sizes. (His firm once caught a shoplifting nun.) “And shoplifters try to blend in with the other customers by how they dress and act,” he pointed out. “It could be the rich kid who has money in his pocket, it could be the bored housewife. There really is no profile. It’s not just the scruffy-looking guy.”

There are, however, different types of shoplifters. Most shoplifters, Bregar said, are “impulse shoplifters.” “A lot of time, they are normal people who give in to temptation. If they are given an opportunity – dim store lighting, high shelving that gives them a feeling of security – they will steal. But studies have shown that most of these shoplifters will not steal if they have been greeted during that visit,” Bregar explained.

The “amateur shoplifter” is a little more serious about it. “When they walk in, their intent is probably to steal from you,” said Bregar. “They steal for themselves and for family and friends and are not as easily dissuaded as the impulse shoplifter.”

The third type of shoplifter has gotten a lot more press recently: “the professional shoplifter.” “This type is stealing to resell. He views shoplifting as his job,” said Bregar. “For this type, getting caught or arrested is an inconvenience.” Because of this, interestingly, this type of shoplifter can be dissuaded. “The professional is working on volume,” explained Bregar. “He or she might only be getting 10 cents of the dollar for the merchandise. If they see a camera system or an electronic article surveillance (EAS) system, such as from Checkpoint, they may pass on that store because they don’t want to be slowed down.”

Organized retail crime (ORC) is a form of professional shoplifting. Often, said Bregar, while adults run the ORC ring, the people doing the stealing are juveniles. A group may enter a store all at once, overwhelming or distracting the staff, and even strip a store of merchandise. Brian Davis, director of national accounts for 3xLogic, reported that ORC rings have targeted beverage alcohol retailers in some regions. “In Arizona, California and New Mexico, there have been ‘beer runs,’ when groups just run in and grab all the beer they can,” he said, “while, on the East Coast, the cases have involved snatching cigarettes.” The 2013 Organized Retail Crime survey done by the National Retail Federation found that 93.5% of all retailers have experienced professional or organized retail crime.

Eyes On The Prize

Being attentive to the people in the store, such as when employees greet customers as they enter, is important to deterring and detecting shoplifting. But another balance must be struck. How many employees can a retailer afford to have on the floor? Some hire security guards for particularly busy times in order to have another set of undistracted eyes in the store. But hiring a guard, such as an off-duty policeman, can be expensive.

Camera systems have their place in a store’s security system, but they don’t always deter shoplifters, according to Bregar. “That’s because they know you are not watching those images right then,” he said. However, technology may be developing to help with that. Some camera systems can be set to send alerts or alarms, even an automatic message over the store’s public-announcement system or a text sent to a manager’s cell phone, when the camera records an event of a certain type. “If you have a product of high value, a champagne for instance, you can set a box around that area and, if the camera records a person lingering there for longer than a certain time, it will send the alert,” explained 3xLogic’s Davis.

Davis also pointed out that video images are important when it comes to determining who committed a crime after the fact and in building a case against them in court. Retailers can also post pictures of shoplifters from their security systems for the employees to see, including posting them at all the locations in a chain.

Benefit-denial devices, such as a locked cap on the bottle that must be taken off at the check-out, can also deter theft.

These devices can also be used as part of an electronic article surveillance (EAS) system. Those are the systems that set off an alarm if a product is taken past a sensor at the door of a store when its tag or bottle cap has not been deactivated. A store selling rare wines in London, called Hedonism Wines, for instance, recently began using such caps, customized with the store’s logo and colors, to protect very expensive wines. The caps were produced for the store by Alpha High Theft Solutions, a division of Checkpoint Systems (alphaworld.com). The advantage of these systems is the product is there, to see, to touch, to examine, but is also protected from theft.

NRF’s Mellor has always enjoyed his work in loss prevention. “It’s always changing, there are always new challenges,” he said. “You are always trying to stay one step ahead of the thieves.”

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