RETAILERS USE COMMON SENSE AND THE LATEST SECURITY TECHNOLOGY TO KEEP THEIR STORES, THEIR PEOPLE AND THEIR PRODUCTS SAFE.
Jack McGrath, owner of Muddy Creek Liquors in Edgewater, MD, is, in many ways, a typical beverage alcohol retailer. He has owned Muddy Creek, a 2,000-square-foot store, for eight years. And in that eight years, he has had his share of crime, including a robbery — “He just jumped over the counter and grabbed the money, scaring the hell out of me,” remembered McGrath — employee theft and shoplifting.
According to the latest National Retail Security Survey, a survey done annually by the University of Florida and funded by Sensormatic, a supplier of electronic security systems, the various forms of theft — theft by employees, by vendors and by customers — cost retailers in general almost $26 billion last year. That’s approximately 1.75% of total U.S. retail sales.
Meanwhile, violent crime against retail employees is a serious problem. According to the National Institute of Occupational Safety and Health (NIOSH), the number-one cause of workplace death in the retail industry is violence. And three-quarters of all the homicides that take place in a retail environment are robbery-related.
Beverage alcohol stores are one of the most common workplaces for this type of violence. According to NIOSH data, liquor stores are the second most likely workplace, after taxi-cab services, to experience a homicide.
Security Systems Plus
Happily for Jack McGrath and beverage alcohol retailers like him, security systems and good old common sense can go a long way toward reducing a retailer’s vulnerability to crime. Four years ago, McGrath installed surveillance cameras in his store. At that time, the security company he used, Sentry Surveillance, based in Kennesaw, GA, predicted that at least one of his employees would quit within two weeks of the camera system’s installation because they had been stealing from him.
Panasonic’s WV-CS854P (left) is a new unitized camera system featuring the company’s Super Dynamics II camera technology, it will be available early next year.
“And [Sentry] was right. One of my employees had been stealing lottery money,” said McGrath, who estimated that his camera system saves him about $6,000 a year by preventing theft.
Indeed, the people at Sentry claim that one-third of all business failures can be linked to losses from employee theft. The University of Florida’s survey seems to buttress this claim. According to the survey, employee theft is responsible for 42.7% of all retail shrinkage.
And this kind of theft is on the rise. “Employee theft was at the highest levels that we have seen in the eight years we have conducted this survey,” said Dr. Richard C. Hollinger, director of the university’s Security Research Project.
Employee theft is particularly dangerous for retailers because employees can steal so much. According to the survey, while the average shoplifting incident involves $212.68 worth of losses, the average employee-theft incident involves more than $1,000.
Beverage alcohol retailers are not immune. “Employee theft is the biggie,” said Sharon Sorcenelli, owner of Barnstable Bottle Shop, Sandwich Spirit Shop and the soon-to-open Cedarville Wine & Spirits, all in Massachusetts. Indeed, there is currently a warrant out for the arrest of one of Sorcenelli’s former employees. “They steal by doing a fake bottle redemption, they ring a sale, then hit “No Sale” [to erase it] and take the money back; they work with an open register drawer,” said Sorcenelli.
Like McGrath, Sorcenelli has also installed camera systems. At her Barnstable store, an 1,800-square-foot space, the system is equipped with four cameras, one for each of the two cash registers, one at the front door and one that watches the store itself. “And we could probably use two more,” she said, “one for a door that isn’t covered and one for the bottle redemption area.”
Sorcenelli warned that camera systems are only as vigilant as the people who use them. For instance, she goes over her stores’ cash-register tapes every day, and if anything looks suspicious, such as a large number of “No Sales,” she goes to the videotape. She also suggested watching the last hour of videotape, when employees are closing the store.
“They take the trash out,” she said. “But is it just trash?”
McGrath agreed about the importance of going over the tapes — and of letting employees know that you do. “I tell them that I review the tapes once a day,” he said.
Ed Banker, Sentry’s sales manager, claimed that employees will know quickly whether you look at the tapes or not. “It won’t take them 20 days to know if you’re not watching,” he said. “You can let them know by telling employees when you’ve seen them do something right, like ‘I saw how quickly you cleaned up that broken bottle,’ for example.”
And of course, you also let them know when you see the bad things. Banker pointed out that camera systems can help a retailer keep tabs, not only on theft, but also on customer service. He advised that retailers install systems that also record sound. However, retailers should check their state’s laws about the making of such audio recordings.
One of the newest developments in camera systems is remote viewing, which allows a retailer to tune into a camera system from an off-site location, such as a chain’s headquarters or even the retailer’s home. This can help a retailer examine the quality of customer service being offered when he or she is not in the store. “And customers vote with their feet,” Banker pointed out.
Another development in camera systems is digital technology. Some systems, for example, can store the images from cameras using a personal computer rather than a VCR. Even if used with VCRs, the newest cameras employ digital technology to record sharper images. “Image quality is key,” said Bob Schindler, marketing manager at Panasonic. “The image has to be clear enough to make an identification. Otherwise, why bother?”
At least one company, Alpha Systems Lab, based in Irvine, CA, combines remote monitoring with digital technology. Its camera systems store their images on PCs, and they can also send those images over phone lines, the internet or a computer network to a remote location.
One retailer using an Alpha Systems Lab product set it up so he could tune into his stores, using his home television, while taking a break from watching football games in the evening. According to Olaf Kreutz, product manager for Alpha Systems, this retailer found doing so to be an important customer-service tool. “There he was at home in front of his TV, calling the store and saying ‘Open register number four; there are people waiting in line.’ After a week of that, he said his receipts were up and his losses were down,” recounted Kreutz.
Seagram and Checkpoint Systems are partnering on source-tagging some high-end brands, like Crown Royal. Source tagging has proven to be an effective deterrent to shoplifting.
Alpha Systems’ Digicorder system, which can handle up to four cameras, costs approximately $2,000. “That’s about the same as buying a time-lapse VCR and a quad processor,” Kreutz pointed out. A quad processor is a device that allows one VCR to record images from four cameras.
In addition to dishonest employees, retailers must also deal with sticky-fingered customers. According to the University of Florida survey, shoplifting costs U.S. retailers more than $9 billion annually. And though the survey found out that beverage alcohol, as a product category, experiences lower than average rates of shoplifting, beverage alcohol retailers do feel the pinch — and often.
“People will rob you blind, if you let them,” said Jan Jackson, owner of Jax Package Store in Atlanta, GA, and the current president of the Wine & Spirits Guild. “In the 30-some-odd years I’ve been in the business, I’ve seen it all: ladies tucking things under garter belts, people carrying things out in their hats. Just yesterday, I had a guy arrested who had put a bottle down his pants.”
Like many retailers, Jackson is a strong believer in prosecuting any person caught shoplifting. “If you don’t, word gets around,” he said. That’s one reason why McGrath makes sure to prosecute any teenager he catches trying to buy alcohol or tobacco with a fake ID. “Their parents may not like it, but it discourages others from trying that or from trying to steal,” he said.
Taping The Bad Guys
Of course, camera systems help with this type of theft as well. And a camera system’s role in preventing shoplifting is perhaps even more valuable than its ability to catch such an incident on tape. That’s why most retailers put their cameras out in full view. Some even install a monitor in the store so that customers can see for themselves that they are being watched, a practice security-camera manufacturers call “public viewing.”
“If you hide the cameras, it’s no good,” said Muddy Creek’s McGrath. He also advocates the use of chimes, which sound when a customer walks through the door. In fact, he installed extra chimes in his store, including inside the beer box, to ensure that his employees always know when anyone walks in. “I have a rule: greet every customer,” said McGrath. “When you do that, the shoplifter will think, ‘Ah, hell, they know I’m here.”
And though he uses cameras to watch his store, he does not use the convex mirrors, meant to give employees a better view of an aisle, often seen in retail operations.
“It helps the customer see where you are too. It makes things better for the crook,” said McGrath, who once worked for several years as the vice president of a large home-improvement retail chain.
Security experts point out that camera systems can also help with other types of customer dishonesty, such as false injury cases, when a customer stages a fall inside a store in order to sue. Liquor stores in particular can also use their cameras to help prove that a minor did not buy from them –“They’ll say they bought from a store that didn’t sell to them and protect the one that did,” explained McGrath — or that if they did succeed in buying, they were asked for ID. Electronic article surveillance (EAS) systems, those systems of tags on products and sensors at the door, are also effective tools against shoplifting — and are becoming more affordable for smaller retail operations.
Like camera systems, one of their biggest benefits is their role as a deterrent. Dave Shoemaker, vice president of strategic marketing at Checkpoint Systems, a security-technology company, calls it “the rat-poison effect.”
“The shoplifter sees the system in your store and goes somewhere else,” he explained. “Whoever doesn’t have a system ends up with a bigger problem.”
Sharon Sorcenelli, who installed an EAS system in one of her stores last May, experienced that deterrent effect first-hand. “We knew that two people were stealing from us. They’d work together: one would distract us and the bigger guy would put a bottle down his pants,” she said. “Now that they know we have the system, we haven’t seen them.”
Sensormatic’s Intellex (top) is a digital video recorder that can display, record and archive images from up to 16 cameras. Sensormatic’s unobtrusive, but still noticeable dome camera (bottom) keeps watch from the ceiling.
According to Checkpoint’s Shoemaker, an EAS system, which generally costs a few thousand dollars, pays for itself in a small retail operation in a matter of months. “In the vast majority of liquor stores, the return-on-investment is in six months or less,” he said.
The biggest development in these systems is “source tagging,” where the tag detected by the sensors is actually applied by the product’s manufacturer. Checkpoint, for example, has been working with Seagram to apply tags to a number of high-end spirits brands, including Crown Royal, Chivas Regal, Martell Cognac and The Glenlivet, products that retailers sometimes put in locked displays. According to Checkpoint, when these source-tagged brands were put on open shelves in a test by American Stores, sales increased dramatically.
Since the tags are applied by the manufacturer, they can be made more tamper-proof, with the newest, ultra-thin labels able to be applied under the label on the bottle, for instance. And pre-tagged products can be protected from the get-go, from being stolen by employees before they even hit the store shelves. Shoemaker predicted that source tagging of beverage alcohol brands will become common “in the not-too-distant future.” He pointed out that source tagging became commonplace for products such as camera film and sunglasses over a period of two years or less.
And, of course, retailers can tag product themselves, at the cost of a few cents per tag. Sorcenelli pointed out that not all the products in a store have to be tagged in order for the system to work. Shoplifters “know we have it, but they don’t know what’s been tagged and what hasn’t,” she said.
Though crime is still a problem, the news about combating it is good for retailers. “The technology is very exciting. There is so much going on,” said Pete Schmidt, sales support manager at Sensormatic. From watching their stores from the comfort of their own living rooms to knowing that even the smallest of products can’t be concealed from their EAS sensors, retailers can protect their businesses as never before.
Cheryl Ursin is contributing editor to Beverage Dynamics and Cheers. Her writing has also appeared in The New York Times and other publications.
COMBATING VIOLENT CRIME
While internal theft and shoplifting can do serious damage to a retail operation’s profitability, it is the prospect of armed robbery and other violent crime that truly frightens. Jan Jackson, owner of Jax Package Store, Atlanta, GA, has made several important business decisions in order to lower his store’s risk of robbery. For example, unlike many liquor retailers, he does not cash checks. His theory: robbers who know that a business cashes checks will know that it keeps more money on hand than the usual retailer.
Jackson’s camera system, which is visible to customers, also serves as a deterrent to this type of crime. Indeed, according to Ed Banker of Sentry Surveillance, armed robbers, on average, check out six to eight businesses before choosing which one to rob — usually the one without a visible camera system, he said.
Jackson also makes sure to have a minimum of five employees at work in the store at all times. And though it is expensive, he uses an armored-car service to bring his deposits to the bank, rather than having someone from the store do it. He also has security guards in the store on the weekends and in the evenings.
What he — and many other retailers — will not do is keep a gun behind the counter. According to the National Association of Convenience Stores, the presence of a gun behind the counter increases the likelihood of employees and others getting hurt during a robbery. The association, which is against using armed guards as well as arming other employees, maintains that employees should be trained never to resist a robber.