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Loss prevention management has had to use all the tools at their disposal to combat external and internal theft. It all starts with a good ‘team-effort’ approach, that is the LP Department cannot do it all by themselves. The best departments have buy-in from store operations, supply chain, human resources, inventory control and other areas in a coordinated effort to control losses.
Photo credit: (Image courtesy of BigStock)
While the increased brazenness and skills of both shoplifters and unscrupulous employees continue to plague retailers across the United States, the industry’s most respected loss prevention researchers offer some good news in their just released survey. According to numbers highlighted in the 26th Annual Retail Theft Survey conducted by Jack L. Hayes International, the leading loss prevention and inventory shrinkage control consulting firm, both apprehensions and money recovered from retail theft increased again in 2013.
The survey says almost 1.2 million shoplifters and dishonest employees were apprehended in 2013 by just 23 large retailers, who recovered over $199 million from thieves. The figures show that shoplifting apprehensions were up 2.5 percent and recovery dollars increased by 4.5 percent. When it came to cracking down on internal theft, the survey revealed that apprehensions for dishonest employees rose 6.5 percent and recovery dollars rose 2.5 percent. According to Mark R. Doyle, President of Jack L. Hayes International, these figures display a positive trend of apprehension and recovery that has been seen for three consecutive years.
"Retail theft is a serious problem which is stealing retailers' profits, and causing consumers to pay higher prices to help offset these losses,” says Doyle. “With all the preventive measures our survey participants take it is amazing they still have to make all these apprehensions and continue to make more and more apprehensions annually.”
When it comes to shoplifting, Doyle admits it is a cause and effect environment. He says that the 23 major retail organizations who participated in the research outlined several major reasons why shoplifting incidents continue to rise. These 23 large retail companies represent 23,204 stores and over $660 billion in retail sales in 2013. Here are some of the reasons they give:
- Continued growth and complexity of Organized Retail Crime is Increasing: Losses from ORC are reported to be over $30 billion annually, triple what they were just 10 years ago. These thieves work in teams often using distraction to commit their theft of items such as over-the-counter medicines, razors, baby formula, batteries, CDs and DVDs, tools, and designer clothing. It is not uncommon for retailers to tell of experiences where groups of professionals -- hardcore, or international shoplifting gangs -- ‘hit’ their stores using ‘booster-bags’ and similar shoplifting devices. Losses routinely are reported in the thousands of dollars per incident.
- Stolen Merchandise Easier to Sell: Without question, many thieves have found that selling their stolen items through various on-line auction sites results in quicker sales and much higher prices than the traditional selling of items on the street or at a local flea market. This easy access to a much larger audience has resulted in shoplifting becoming a highly popular way to quickly get cash.
- Reduced Sales Floor Coverage/Customer Service: Less employees on the sales floor servicing customers, creates greater opportunities for thieves to steal.
- Reduced Social Stigma & “Low Risk/Non-Offensive” Crime: While the amateur shoplifter is finding the social stigma of shoplifting to be lessening, many professional and hardcore thieves find shoplifting is both a highly profitable and low jail-risk endeavor. Shoplifters know that violent crimes can draw jail time, while the prosecution of non-violent crimes such as shoplifting is not always encouraged by law enforcement, and therefore seldom results in jail time.
Several other reasons Doyle and his group offer as explanations for shoplifting’s continued upward trend include; a lackluster economy and continued higher unemployment levels; retailers carrying higher dollar product lines/items; an overburdened criminal justice system leads to recidivism; and finally, loss prevention staff members are more focused on the crime.
As far as the pure numbers go, the annual Hayes survey shows the following:
- Apprehensions: 1,180,720 shoplifters and dishonest employees were apprehended in 2013, up 2.8 percent from 2012.
- Recovery Dollars: Over $199 million was recovered from apprehended shoplifters and dishonest employees in 2013, up 4 percent from 2012.
- Shoplifter Apprehensions: 1,102,635 shoplifters were apprehended in 2013, up 2.5 percent from 2012.
- Shoplifter Recovery Dollars: Over $144 million was recovered from apprehended shoplifters in 2013, an increase of 4.5 percent from 2012. An additional $98.6 million was recovered from shoplifters where no apprehension was made, up a significant 22.2 percent from 2012.
- Employee Apprehensions: 78,085 dishonest employees were apprehended in 2013, up 6.percent from 2012.
- Employee Recovery Dollars: Over $55 million was recovered from employee apprehensions in 2013, up 2.5 percent from 2012.
The survey also points out that one out of every 39.5 employees was apprehended for theft from their employer in 2013; this based over 3.0 million employees. The survey also shows that on a per case average, dishonest employees steal approximately 5.4 times the amount stolen by shoplifters ($706.21 vs $130.89).
“Loss prevention management has had to use all the tools at their disposal to combat external and internal theft. It all starts with a good ‘team-effort’ approach, that is the LP department cannot do it all by themselves. The best departments have buy-in from store operations, supply chain, human resources, inventory control and other areas in a coordinated effort to control losses,” explains Doyle. “LP training plays a huge role in involving all associates and teaching them what they can do to prevent a theft or actions they are to take when they observe a theft (internal or external). Prevention is the key here, and the sales floor staff is the first line of defense against shoplifting.”
Perhaps among the most distressing statistics for Doyle and his research team is the steady increase in employee retail crime. As the economy continues to stagnate and employee stress multiplies, there is a domino effect propelling internal theft. Some employees feel more pressure to steal, and at the same time, loss prevention departments have felt the pressure to cut staff. The leading contributors to the growth of internal retail theft according to Hayes International include:
- Ineffective Pre-Employment Screening: The first step to controlling internal theft starts at the point-of-hire; do not hire the "bad apple." Some retailers, in an effort to reduce their costs, have lowered their pre-screening requirements and are now hiring more questionable employees. Anytime statistics show one out of every 39.5 employees is actually caught stealing by their employer, there has to be some type of breakdown in the pre-employment screening process.
- Less Employee Supervision: With lower management levels, there is less supervision of employee activities which results in more opportunities to commit theft.
- Ease in Selling Stolen Merchandise: Merchandise stolen by employees can be more quickly and easily sold, and for a much higher price using internet auction sites. This easy access to a much larger audience for stolen goods has resulted in more theft by those dishonest employees looking for quick cash.
- Decline in Honesty: There are more dishonest people throughout the nation today, and this decline in personal honesty is taking its toll. Almost daily we hear of business, government, law enforcement, celebrities, sports figures, and even church leaders being caught up in questionable activities. Such events make it easier for “borderline” employees to steal and to rationalize their theft acts. In addition, the part-time workforce is growing, and it is not uncommon to find that many such workers have less loyalty to their employer, and are more apt to take advantage of opportune circumstances.
“This reduction of employees and the lack of supervision of their activities is giving dishonest employees more opportunities to commit theft. We find weaknesses in the pre-employment screening process, and point-of-sale activities. The first step to controlling internal theft starts at the point of hire,” Doyle emphasizes. “You must have a good thorough pre-employment screening process. After that, reasonable systems and controls need to be put in place, and those controls regularly monitored to ensure ongoing compliance. It should also be mentioned that the growth in part-time workers is have a detrimental impact on internal theft. These part-times workers have little to no vested interest in the company.”
Even though most successful loss prevention departments have a tight group of professionals at its core, technology has become an integral part of the LP strategy. Doyle admits his retailers tell him technology use is growing and becoming sophisticated.
“Technology has helped in various ways. Many of our survey participants cite the use of exception based reporting software as helping them to identify internal theft cases much more quickly than in the past. Also, CCTV systems tied directly into the POS have helped to prevent and identify ‘sweet-hearting’ pass-outs at the point-of-sale. Remote video monitoring is giving LP live coverage in many locations,” he says.