Loss prevention is a result, not an effort. Senior retail executives run competitive businesses and expect positive results from their management teams. In the case of inventory shrinkage, lower than average losses are often considered a success. Being successful in anything is tough, but it's especially tough in loss prevention, where true success is dependent on many others.
To thrive as loss prevention managers, we need to be, know and do certain things. While not all-inclusive, the list below provides some insight into what our research (surveys, experiments and field observations) has found over the years can make the difference in crime prevention and loss control success.
1. Make sure your goals and methods support your company's goals.
Almost every retailer I know of exists to maximize shareholder value by profitably selling products made by manufacturers. The typical LP support mission is to help the company sell more and lose less. So, LP strategy should include working to make company locations safer for workers and guests, helping to make the total product supply chain more efficient and secure, and using people, procedures and technologies to cost-effectively reduce theft.
2. Be a leader.
The U.S. Army has long worked to understand and produce high-quality leaders. Lives, and our freedom, depend on their getting it right. The Army's latest leadership manual, FM 22-100, bases leadership development on the imperatives Be, Know and Do. The same principals can help managers accomplish their goals. Be a good leader by reflecting sound character, decisiveness and selfless service. Know your people, how to communicate and inspire supervisors, peers and subordinates, and strive for proficiency in the technical and tactical nuances of effective crime and loss control. And do make good decisions, motivate people, and constantly improve LP processes and results with evidence-based solutions.
3. Surround yourself with good people, and don't skimp on their development.
Nobody can do it all by themselves. Some people are good at big picture and/or creative thinking and problem solving; others excel at detail work. Many are good at routine tasks. Some are good with people, while some are better at numbers and technical details. It is important that corporate and field leaders have leadership qualities. Likewise, support personnel should be relatively gifted and reliable. Our research on loss prevention personnel indicates that an individual's personality traits, work experience, and to a certain extent, intelligence, influence how well he or she will be able to handle a particular job.
Use good pre-employment testing, background checks, interviews, and work sample exercises to find the right people. High-impact training usually provides requisite job knowledge and skills, while providing testing feedback to trainee and supervisor alike. Of course, non-LP distribution center and store employees are critical to achieving good loss results, so working with their managers to improve pre-employment screening and ongoing training is paramount. Successful managers tend to put extra effort into selecting and training people at all levels.
4. Focus your efforts on your problems—not the industry's.
Industry asset protection studies and association conferences provide good insight into the challenges others perceive and how they're dealing with them. Peer and expert recommendations can be helpful as well. But it's really important to periodically identify and prioritize your own crime and loss problems. Loss and incident indicators like inventories, ship to scan rates, POS sales, quantity adjustment data, apprehension reports, hotline calls, employee surveys, CCTV footage and audit results alert us to problems, provide an important understanding of our problems, and allow us to assess the total loss impact and to prioritize it.
5. Dig deep in order to focus: who, what, when, where, why and how.
While the first step is to detect a problem, it's also important to fully understand the dynamics of your prime loss or crime problems. Good treatments require good diagnoses. The data sources mentioned above can provide the detail your team requires to accurately describe your issues so you can tailor focused solutions. Our research and others' has repeatedly shown that not all loss is as significant as it might at first seem, and that many times loss problems are not related to theft. Even theft-related problems can be addressed by making high-risk product handling processes better throughout the supply chain and in the stores. Digging deeper means looking at how high-loss items are related to clusters of locations, why those particular products are targeted, who seems to be getting them, and how they often appear to be doing it, for instance. Merchandise, cash and data processes need to be explored for opportunities.
When theft problems are discovered, digging deep means understanding which deterrents broke down, what the common theft methods are, and how stolen goods are used or converted to cash. Interviewing offenders, LP staff and peers and reviewing video footage can provide key data for solution design.
6. Get good data.
Seek good sources of current, credible information on threats and effective solutions. This can be tough to accomplish. All data contain errors—some more than others. Loss data are particularly difficult, since item-level store shipment, back-room, on-shelf and sales data do not often reconcile correctly. We have learned to look at all of these measures, as well as special count data, with an eye toward convergent evidence of improvements—or lack thereof—as a result of a loss control effort. Research around the globe on LP effectiveness shows varying results. Senior executives expect LP managers are making good decisions using good data.
7. Test and refine your solutions before a total roll-out.
Off the shelf rarely works. Retail facilities all experience unique problems and need unique solutions. It would be great if one size fit all, but data show that each specific store location differs enough in manager skills, prevailing attitudes and culture, store layout, and surrounding demographics to ensure uneven results. Nobody wants paralysis by analysis, but proposed solutions should be tested in real-world conditions, refined for practical use, and then deployed where problems require them. Rigorous evaluation research is recommended where possible. Evidence-based decisions are preferable in all industries.
Offenders, employees and consumers can provide insight into the expected efficacy of proposed solutions, and initial testing in stores can help determine how practical and robust the solutions are likely to be. Quasi-experimental research means using test and control locations to assess the cost-effectiveness of LP efforts. Sometimes LP programs work well enough to be profitable; sometimes just enough to hold their own, and sometimes they are a waste of money. LP managers should be able to find out before large investments are made.
8. It's all about the managers.
Loss prevention professionals can accurately diagnose and prescribe treatments for a serious asset protection problem, but unless the affected location managers consistently implement the solution(s), the results are not likely to be positive. Store and distribution center managers must be thoroughly trained in the LP program, and they must also buy into it and skillfully execute it for it to work. It is important to mention that our research into the causes of high or low shrinkage levels indicated the tenure and attitudes of managers was critical to maintaining low inventory shrink. Management commitment and follow-through are keys to success. Loss prevention managers must use good leadership, sound research data, and persuasion to enlist and maintain manager action.
9. Find out how well your protective efforts are being executed, and stay on top of it.
There are no fire-and-forget weapons in loss prevention. LP is hard and repetitive work. Assuming we get the problem diagnosis and treatment parts right, our field experiments have shown that poor LP execution (across the chain and over time) can kill any chance of sustained success, even with the best-designed solutions. Pre-deployment testing should help prevent some of these problems. Try to learn the best ways to keep an LP effort important and fresh before deploying it. LP efforts should include an ongoing audit routine to keep the program going.
10. Periodically measure and adjust your efforts.
Crime and loss problems come and go, and they morph and adjust. As retailers sell new things in new ways and places, opportunities for error and dishonesty follow. The challenge is to find more effective handling and protective processes and better ways to get employees out engaging with customers. LP managers should keep up with audits, data flow and field visits so they can constantly monitor looming or changing issues. Just as important, current LP programs should be critically scrutinized to find out if they remain relevant and cost-effective.
This listing is by no means all-inclusive, but hopefully it provides some helpful tips for the frontline against retail crime and loss. LP is not an easy business, but is critical to modern retail success.
Read Hayes, PhD, CPP is director of the Loss Prevention Research Council and coordinator of the Loss Prevention Research Team, DCP, of the University of Florida . Dr. Hayes has more than 28 years' hands-on crime and loss control experience, providing expertise to numerous organizations worldwide including Target, Home Depot, Bloomingdales, Coles Meyer, Disney, Proctor and Gamble and Wal-mart. Dr. Hayes founded the University of Florida 's National Retail Security Survey in 1989, and his current research focus includes offender decision-making, total supply chain protection, asset and key product protection and premises violence, security and safeness. For information on the LPRC, visit www.lpresearch.org.