One of the biggest issues facing beverage retailers, especially those in the small-to-mid size range, is shoplifting. This includes both internal and external theft.
While this challenge isn’t new, it also doesn’t appear to be disappearing anytime soon. According to the 2015 National Retail Security Survey (NRSS) conducted in the U. S., retailers surveyed reported an average shrinkage of 1.38 percent, amounting to a staggering $44.02 billion dollars in lost sales revenue.
“Within the food and beverage industry, wine and spirits have been consistently reported as the most stolen items,” says Kim Melvin, director of global solution and product marketing for Tyco Retail Solutions. “Internal theft as a cause of shrink is also on the rise, and remains a serious problem for retailers.”
Within the liquor industry specifically, the concern for underage drinking and social responsibility is a driving focus for these retailers to reduce all forms of theft.
“The liquor industry has been slow to adopt anti-theft solutions, however, due in part to the pricing and licensing challenges associated with implementing up-to-date technology,” Melvin says.
Katherine Matak, author of Store Detective 101: Essential Basics of Retail Security, says that private liquor stores there often incur snatch-and-grabs of a case of beer, bottle of wine.
“People walk in grab the item and walk out,” Matak says. “Staff are either not trained to handle this kind of shoplifting or they have been told to not engage as the retailer is prepared to take on a loss of this kind.”
Technology has proven an effective way for retailers to fight back.
They are continuing to make significant investments in video analytics and surveillance to protect their stores. A strong source of delivering event-information, both in real-time and during playback, video surveillance has been one of the top technologies on retailers’ lists for the past few years.
“As pressure mounts around the need for more real-time insight into operational performance, retailers are deploying video intelligence to reduce the number of internal and external theft incidents,” says Mark Erickson, director of global source tagging for Tyco Retail Solutions. “There has also been recent momentum around leveraging source tagging to protect product in stores.”
As Erickson explains, source tagging is the process of applying EAS labels or tags at the point of manufacturing, allowing merchandise to arrive at the store already protected against theft. This method frees sales associates to service their customers rather than tagging goods, resulting in increased security with reduced labor costs.
Investing In Security
Theft, personal security, item damage, and lack of surveillance are some of a small-to-mid size business owner’s most pressing concerns. When shoplifters enter a store, their behavior is determined in large part by the environment. Immediately, they assess the pros and cons by scanning the space and judging its appeal as a theft target.
“The offender weighs reward versus risk, and then decides whether or not to steal,” Melvin says.
Experts agree that the following three components, known as the “Theft Triangle,” must be in place for shoplifting to occur: 1) perceived need for an item, 2) a low risk of getting caught, and 3) access to the item.
“To truly impact loss prevention efforts, it is not enough to prevent crime; retailers want to deter attempts to commit a crime,” Melvin says. “An effective way to do this is to influence an offender’s perception of the crime situation – to increase awareness of risk, decrease a sense of product accessibility and to reduce criminal motivation.
“Therefore, creating an active deterrent – one that can coexist in a store environment welcoming to shoppers – is critical to building an effective loss prevention program,” she adds.
In the liquor industry, the use of bottle caps, single-entry facilities and internal employees monitoring entrances and exits are the primary security programs used today. And retailers can achieve better results with newer technologies.
David Bitton, COO at Supreme Security Systems, says IP camera systems provide a much clearer image then the analog camera systems that were more prevalent a few years ago. This technological advancement has significantly helped law enforcement in identifying the perpetrators.
“Also, video verification systems which, as the name suggests, use interactive video to verify emergency situations and then send the video in real-time to central monitoring stations and law enforcement,” Bitton says.
One major misconception by beverage retailers is that security measures are not needed.
According to the Global Retail Theft Barometer, retailers lost $95.01 billion in 2015 as a result of employee theft and shoplifting. Retailers often are also mistaken about the source of shrinkage in their business. Dishonest employee theft and shoplifting together accounted for 77 percent of total shrinkage for retailers in 2015.
“The most common misperception that retailers make in relation to security is that the cost will not be worth it,” Matak says. “But a good video surveillance system is a deterrent and is an aide to police in terms of determining organized criminal activity, identifying perpetrators, and assisting the retailer in knowing who the shoplifters are, even if they did not catch them at the time.”
“There is also a misconception that criminals only target large retailers,” Erickson says. “Smaller retailers in fact have become increasingly targeted because they often lack the sophisticated security systems that larger enterprises have implemented. Small retailers are also targeted because criminals are aware that they have less time and personnel to proactively focus on security.”
When establishing a security program, beverage retailers should look to partner with an organization that has deep retail industry expertise and has continued innovation in technology.
“Retailers would benefit from a partner with a wide range of security solutions, including fire and life safety, video, access control, EAS, intrusion, who as a single-source supplier can help to improve business efficiency beyond just loss prevention,” Erickson says.
Moreover, retailers should consider partners that have global coverage and the ability to scale as the retailer grows. A partner should be able to support a retailer through its lifecycle with consultative programs and project management abilities in the front end to maintain ongoing maintenance, service and support in the back end.
“They should look for a company with the category experience that can look at specific situations and subsequently recommend the proper design, based on their expertise,” Bitton says. “Also, look for a security partner that can demonstrate, with a clear track record and references, that they can provide the necessary customer support, as in 24-hour service and support, which can be the difference to keeping your systems up and running in crucial situations and emergencies.”
While many companies have historically relied on electronic article surveillance (EAS) tags to deter shoplifting, savvy retailers are taking this one step further. They are integrating radio frequency identification (RFID) into tags to gain greater insight into the ongoing product movement throughout the supply chain and in the store. Melvin says that in some use cases, RFID can provide nearly 100 percent inventory accuracy.
“Since RFID tags now work with liquids and foil-wrapped products, beverage companies are beginning to explore the advantages of leveraging this technology for tracking inventory and authenticating their products,” Melvin says. “Wine and spirits can now be RFID tagged and tracked to better ensure that these products are available on store shelves, as well as to quickly identify when goods are diverted, counterfeited or stolen from a warehouse or store.”
James Marcella, director of technical services at Axis Communications, says the biggest advancement in technology has been the introduction of analytics that enable security cameras to be repurposed for business applications.
“The same camera that has been used for monitoring the cash registers can also be used to alert store owners or manager when lines are getting to long,” Marcella says.
Similarly, retailers can now use “heat-mapping,” an analytic that overlays traffic patterns from security cameras onto the scene, to determine the direction and path the average customer takes through the store. You can also quantify “dwell time” at an end-cap of display and deliver real-time stats for management purposes.
“This information can be used to charge premiums to vendors who want their products in the best possible location of a store,” Marcella says. “Innovation in the security industry is advancing at a rapid pace, so expect cameras to provide more processing power at the edge, which will be leveraged for video analytics and/or increased image quality. Pricing will continue to drop while features continue to increase, creating new ways for leveraging video for loss prevention and business applications.”
Maura Keller is a Minneapolis-based writer and editor. She writes for dozens of publications on a variety of business-related topics. When not writing, Maura serves as executive director of the literacy nonprofit, Read Indeed.