The State of the Loss Prevention Industry

Mark Doyle on what new industry statistics really say, and how LP departments can improve


So what do we see in the near and distant future? On the shoplifting side, without a doubt more efforts are needed on both the local and federal level for dealing with Organized Retail Theft (ORT). Although in January 2006, President Bush signed into law legislation to establish an FBI Organized Retail Theft Task Force and to create a database for organized retail theft; this is really just the first step. More retailers need to establish dedicated Tasks Forces within their own companies, focused on this growing $30 billion problem. The training of LP personnel and sales people/staff within this area is greatly needed. This is a relatively new type of thief that does not operate as a typical shoplifter.

In addition, retailers and suppliers need to work more closely together on better theft preventative fixtures, to stop the quick theft of multiple items, so product can continue to be openly displayed. The issue of source tagging (embedding the EAS tag in the actual product or packaging) needs to be continually pushed with the manufactures.

On the internal side, the first step to reducing employee theft starts at the point-of-hire; do not hire the "bad apple". The use of pre-employment screening measures (ie. criminal background checks, drug testing, honesty testing, previous employer references, etc.) seems to have leveled off over the past few years. This is an area that needs more focus/attention by many retailers, as a company is only as good as its employees. It’s better to spend the money "up front" identifying and hiring the best available candidates than to spend that money (or likely more) later on trying to get rid of a dishonest or unproductive employee. The use of Point-of-Sale exception based monitoring programs continues to grow as does the use of training and awareness programs to reduce employee theft. CCTV interface with POS exception based software should continue to grow in the coming years.

From both an external and internal theft viewpoint, the use of CCTV with remote monitoring will continue to find favor with retailers, as CCTV is great for both prevention and detection of theft.

In summary, the annual theft losses from shoplifters and dishonest employees are a much greater problem than most people realize. Those retailers and companies who continue to invest in their employees and in proactive and prevention oriented loss prevention systems will have the best chance to win the war on theft.

About the author: Mark R. Doyle is president of Jack L. Hayes International Inc., and has more than 20 years experience in the loss prevention field. He has consulted with some of the finest retail, wholesale and manufacturing companies in the world. Hayes International has been in the loss prevention/shrinkage control consulting business for over 28 years, and is recognized on an international level as one of the foremost loss prevention and inventory shrinkage control consulting firms in the world.

About the Survey:

PARTICIPANTS

  • 24 Large Retail Companies
  • 13,313 Stores (representing an excellent cross-section of the United States)
  • $519,973,820,000 in Annual Retail Sales (2005)
TOTAL RETAIL THEFT APPREHENSIONS
      Difference
  2004   2005 #/$  Pct.

Apprehensions 693,177 676,451 (16,726) (2.41%)

Recoveries $108,287,948 $127,032,819    $18,744,871 17.31%

Avg. Case Value $156.22  $187.79 $31.57   20.21%


SHOPLIFTING
      Difference
  2004   2005 #/$  Pct.

Apprehensions 631,295 607,457 (23,838) (3.78%)

Recoveries $65,901,473 $77,070,619   $11,169,146 16.95%

Avg. Case Value $104.39 $126.87 $22.48 21.54%

Recoveries $26,409,718 $30,160,008 $3,750,290

14.20%

(No Apprehension Made)