'Tis the Season for Shoplifting

Nov. 23, 2004
Gearing up for the holiday season at your retail operation? Focus in on these holiday loss prevention tips for retailers

[Editor's Note: We're proud to announce that Liz Martinez will authoring a column for SecurityInfoWatch every month dealing with issues of retail security and loss prevention. Look for her in Security FrontLine eNewsletter and on the Retail Security section of SIW.]

The day after Thanksgiving traditionally opens the portals to holiday shopping. As stores are flooded with eager bargain-seekers this November 26, wise retailers will do well to remember that shoplifters also swell the post-Turkey Day crowds.

Every day is a good day for shoplifting, but thieves know that they can take advantage of the chaos that occurs on the unofficial opening of the holiday shopping season to hide in the crowds. They slither among legitimate shoppers right up until Dec. 24, doing their Christmas stealing.

Stores inadvertently make it easier for both internal thefts and shoplifting to occur during the holiday rush. The swelling of shoppers demands the hiring of seasonal workers. The presence of these temporary employees contributes to both internal and external thefts. In addition, full-time staff are stretched thinner during the holiday shopping season. Their attention is diverted in many more directions, leaving quarterback-sized openings that thieves can use to their advantage.

An Ounce of Prevention
To keep shrink down during the next month, retailers must make reducing thefts as much -- if not more -- of a priority as making sales. Store managers or loss prevention executives who are tempted to focus more on sales than theft, or on apprehension over prevention, would do well to remember the Rule of 33. The Rule of 33 states that if an item that retails for $100 is stolen, the store will need to sell 33 more of them in order to recoup the loss. Only with the sale of the 34th item will the store begin turning a profit.

(The number of items that must be sold, 33, is based on the store's net profit of $3 for the item, after subtracting wholesale cost, fixed store expenses -- such as taxes and rent -- as well as unexpected expenses, as apportioned to each item. So even if the mark-up for a particular item is higher, and the store has to sell only 23 or 13 more items in order to recoup the loss, prevention starts to look like a pretty attractive idea.)

Temporary Workers: Are They Really Good for Business?
No busy store can handle the holiday rush without additional employees. These seasonal workers keep the cash registers ringing in the holiday cheer, but many of them are also playing Santa Claus to themselves, and leaving with sacks full of unpaid for goodies when they clock out.

Seasonal workers are often part-time, not entitled to benefits (except store discounts, and what could be more attractive than the five-finger kind?), and low on loyalty to a business that will cut them loose right after Santa slides down their chimneys. In addition, the relatively short amount of time they spend in the store, compared to full-time employees, means that they are less experienced and receive less training in spotting shoplifters and thwarting shrinkage.

Add to these facts the statistic that employees overall are the cause of between 45 percent and 60 percent of store losses. Plus, temporary employees have less to lose than permanent workers. Seasonal employees therefore contribute to both internal and external shrink, both by stealing themselves or in cahoots with other employees or outside conspirators, as well as by failing to notice or take the appropriate actions to deter thefts from shoplifters.

Although permanent employees would seem to be better trained and more loyal to the store, many times that isn't the case. Store policies often don't allow for permanent employees to receive benefits or high hourly salaries, and these workers may sometimes be tempted to "make up the difference" between the amount they receive in their paychecks and the amount they feel they deserve by shoplifting or pulling other scams that shortchange the store. And many stores overlook the power of the floor employees to thwart theft, Management sometimes fails to provide them with the minimal amount of training they need to help reduce shrink.

Cures for Holiday Shrinkage
The amount of shrinkage that stores experience during the holiday shopping season is enough to make the most seasoned retailer green around the gills. Fortunately, there are some simple techniques that managers and executives can put into place immediately to combat shrink. Many of them cost little or nothing at all and require only a minimal amount of time.

1) Employee Hiring and Training:
Don't be tempted to pin a nametag onto the first warm body that fills out an employment application. The more desperate you are to hire workers, the higher the risk that you will be burned by bringing on dishonest ones. Take the time to do at least a basic criminal records check and phone three of the applicant's references. Also, have at least one other person interview the prospective employee. Two heads are better than one, and one manager might pick up clues that another one misses.

Invest an hour in instructing employees about shoplifting techniques and appropriate employee responses. Invite store security, mall security or local police to speak briefly about correct procedures for apprehending, detaining and questioning suspected shoplifters -- and the different rules that apply to adults and juveniles. Also, stress that excellent customer service and employee teamwork are the keys to thwarting shoplifters. Incentive bonuses are also a good idea.

Set a "zero-tolerance" policy, and make sure that every employee understands that any illegal shenanigans will lead to immediate termination and prosecution. Period. No exceptions.

2) Smart Layout:
Smaller retailers may have more freedom than chain stores to vary the layout of the stores, but the most successful managers are aggressive about following basic security policies.

Keep high-priced items locked up, and assign a proportionate number of employees to those areas so that sales aren't lost by customers leaving in frustration over not being able to access the products.

The cash registers belong in the front, near the doors, so that shoppers have to pass them in order to leave. Placing the registers in the back invites shoplifters to mosey out of the store with unpaid-for merchandise.

In many chain stores, the visual people trump the security force. If that is the case, pointing out the impact that increased shrink could have on everyone's job, salary and bonus is often enough to get the designers to make small changes that can have large effects. If visual displays are placed so that they could have a negative effect on shrinkage, such as when a designer insists on hanging a Santa Claus decoration where it blocks a CCTV camera, a little reason may lead to a compromise that is in everyone's best interest.

3) Anti-Shoplifting Tactics:
Employees are always the first line of defense against shoplifting. Train them well and insist that they provide excellent customer service.

If you don't have a CCTV system, now is the time to get a good one. If the store really can't afford to make the investment, put up fake cameras, or augment some real cameras with fake ones. But -- and this is a big but -- the fake cameras must look real, otherwise, they're worse than useless and may even serve as an invitation to thieves.

Increase the number of uniformed security guards as well as plainclothes floorwalkers who patrol the store. If you don't have any on staff, contract with an agency to provide them, but don't try to bargain for the absolute lowest rate, because you'll get what you pay for. Make sure that the guards who work in your store are presentable and well-trained, not unkempt superhero-wannabes who work cheap because this is the only job they could get.

Keeping the Rule of 33 in mind, it is clear that paying for security is actually a way to increase profits by decreasing shrink. (Consider the cost of one $100 item stolen per hour because of a lack of security personnel. Security officers cost much less than that.) Security is an investment that will pay off in higher returns, not an act of throwing money down a black hole.

Make it known through posters and by word-of-mouth that every shoplifter is prosecuted. Period. No exceptions.

Try a variation on the overseas technique of posting cardboard cutouts of security officers in different places in the store. Dress mannequins in uniform or post photos of police officers or security officers around the store. Change the location of these deterrents daily. Incredibly, people react to these images in the same way they would to the presence of real officers, as long as their locations are varied constantly.

About the author: Liz Martinez is the author of "The Retail Manager's Guide to Crime and Loss Prevention: Protecting Your Business from Theft, Fraud and Violence" (2004, Looseleaf Law), and is a retail security/loss prevention consultant and an instructor at Interboro Institute in New York City. She can be reached through her website at www.retailmanagersguide.com.