Spotting And Stopping Today's Thieves

Oct 1, 2007 12:00 PM, By Steven May

Retail loss prevention (LP) experts have bad news for retailers when it comes to stopping today's thieves: there's no shortcut. Because today's thieves attack from so many directions, retailers can no longer rely on one-size-fits-all LP approaches to substantially reduce shrink.

But there's good news, too. Though thieves are becoming more sophisticated, LP programs are as well. Retailers no longer have to rely on homegrown, apprehension-focused tactics as the core of their loss-prevention strategies. With a well-supported LP team, all retailers, large and small, can implement proactive, robust LP programs that go beyond apprehension to increase profit margins — and be counted on to provide long-term financial results.

Spotting the source

Because various types of theft impact retailers in different ways, a retailer must examine its current situation and determine its largest threat. Most retailers, regardless of size, probably have varying levels and theft sources based on specific store locations. These sources can include:

• Organized Retail Crime (ORC): High-quality, brand-name retailers should be most concerned with this high-profile retail issue.

• Shoplifting: According to a recent National Retail Federation (NRF) survey, approximately one-third of shrink is due to shoplifting.

• Internal Theft: The NRF survey also reveals that internal theft can represent up to half of a retailer's losses. Fraudulent activities at the point of sale and general merchandise theft are two of the most common methods of internal shrink.

Evaluating your current LP program

Although apprehension may be visible, there are other initiatives that further strengthen LP programs. LP executives must ask themselves if their existing LP programs are incorporating elements to attack shrink from all fronts. Some questions to ask are:

• Is the operational environment of your store promoting safety and preventing shrinkage?

• Are cases being investigated thoroughly and quickly to reduce profit loss?

• Are you confident that employees are completing legitimate transactions?

• Do employees have a thorough understanding of processes that could create shrink if handled incorrectly?

• Are customer service levels making your store a challenging environment for outside theft?

LP 101: Training and education

A successful, sophisticated LP program is designed to target the problem of theft at its source, not at the apprehension stage.

Nurturing an LP mentality within an organization can be challenging, but it offers impressive results. Once LP becomes a storewide action item, not just something to be handled by a small staff, the entire workforce can work toward mutual goals.

Weak training programs and insufficient employee awareness can make LP goals seem low-priority to employees. LP principles such as compliance, inventory policies and physical safety should be integrated into a retailer's corporate culture. Employees should be just as aware of LP policies and processes as they are of other store procedures.

LP executives should set their sights on evolving away from reactive policies toward a proactive program. Education and training are at the core of proactive initiatives. For internal theft, formal training allows retailers to hold their employees accountable for compliance infractions, and an open-door or hotline policy for reporting internal theft can open investigations on otherwise undetected theft.

Overcoming the limitations of traditional LP programs

Outside of big-box retail, in-store LP associates are rare. In fact, most specialty retailers follow a geographic approach for LP coverage. In some cases, one individual may be responsible for multiple outlets separated by great distances. Tight LP payrolls make adding to in-house LP staffs difficult. These factors make it challenging to maintain visibility within all stores.

Some retail chains compensate for small staffs by focusing on “troubled” locations. However, many different factors can contribute to a particular store's theft levels. Aside from geographic location, excess staff turnover rates can also turn an otherwise low-risk store into a high-risk store very quickly. To be successful with this approach, retailers must commit to consistent evaluation of store theft levels and be willing to adjust efforts when needed.

One option for retailers is partnering with a third-party LP provider to support their existing LP team. Activities including employee awareness programs, compliance and control audits, mystery shopping and analysis of exception-based reporting can strengthen the return-on-investment of LP programs, but can put a strain on internal resources. With the right practices in place and a reinforced LP staff, a retailer can be well on its way to identifying and preventing theft and increasing its bottom line in the process.

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Steven May is president and chief executive officer of LP Innovations. With more than 25 years of experience, May is a seasoned veteran of the retail LP industry. He can be reached at smay@lpinnovations.com. For more information about this topic, visit www.lpinnovations.com.

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