Managing and Reducing Shrinkage

October 1, 2014 by Leave a Comment

theft (11)The retail industry according to some reports was a $2.5 trillion in 2012 with a predicted increase of 3.4% for the year 2013. As the busiest season for the retail industry is fast approaching, retail stores and businesses will be busy keeping inventory on the shelves as avid customers shop at their stores. While many retail stores prepare for this time, retail security and surveillance should be part of their strategy to keep this year the best profitable yet.

For more information about shrinkage follow the links below.

Reducing Retail Shrinkage: How to Beef Up Security and Prevent Loss in Your Store

Shrinkage (aka: Public Enemy #1 for most retailers), can eat up a significant amount of your profits. According to the National Retail Federation, retail shrinkage amounted to $34.5 billion in 2011, and a big chunk of that was due to theft or fraud.

That’s why it’s critical to constantly stay on top of protecting your store. Keep your systems up-to-date, be vigilant about spotting fishy behavior, and see to it that your staff is adequately trained to deal with security issues.

To help you do all that, below are some of the most common causes of retail shrinkage along with security tips to help you prevent them.

Shoplifting

A common problem among retailers, you can prevent shoplifting with the following steps:

1. Recognize the signs – Educate yourself and your staff on how to spot shoplifters. Keep an eye out for people who:

Survey: Retail shrink translates into $57 billion loss; cash theft jumps 20%

New York — Shrinkage levels average 1.27% of sales, which translates to a $57 billion loss to the industry, according to the U.S. Retail Fraud Survey, which is based on research into the systems and strategies used by 100 leading North American retailers.

The biggest area of store loss remains employee theft (38% of shrink), up 3% from last year, according to the study, published by U.K. based Retail Knowledge and sponsored by Volumatic and Kount. It is followed by cash theft (24%), up 20% from last year, administration and book keeping errors (21%), down 9%, and shoplifting (11%), down 15%.

The biggest area of online loss is fraudulent use of credit cards (59% of shrink).

In other survey highlights:

• Return fraud is costing retailers an average of 0.25% of sales this year, compared with an average of 0.4% last year.

• With regards to loss prevention departments, on average, each member of the fraud prevention team is responsible for $103 million of sales.

Managing Loss Prevention

5 Tips for Reducing Shrink

1. Find vulnerabilities: Take a look at your store layout as though it were in a heist film and think, “If I were to steal something, how would I do it?”
2. Determine where to concentrate your resources: Your high value items that can be stolen easily should be of more concern for you when merchandising, as well as protecting with security features.
3. Cameras don’t work unless you use them: Installing cameras isn’t enough to deter employees and serial shoplifters. If you notice discrepancies in the register or on the shelves, look at the tape.
4. Signs deter some, not others: Professional thieves aren’t likely to care much about signs (or cameras for that matter). However, employees and amateur shoplifters can be dissuaded if they know they are being watched.
5. Talk to your team: Employees need to be on the same page as their manager when it comes to a loss prevention strategy. Source: retailminded.com

 

 

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Racial Profiling In the Retail Industry

September 24, 2014 by Leave a Comment

shoplifting4According to The National Association for Shoplifting Prevention “There is no profile of a typical shoplifter. Men and women shoplift about equally as often.” And race does not matter. Men, women, teenagers and children shoplift regardless of their race or economic status. Yet, entering a store race does matter, and profiling takes place immediately. Allegations about racial profiling involving Macy’s is one of the most recent news in this country, but it won’t be the last.

To read more about racial profiling in the retail industry follow the links below for more information.

“There are very few African-American men in this country who haven’t had the experience of being followed when they were shopping in a department store. That includes me.”

                                                                                President Barack Obama

Racial Profiling
How does it make you feel when you hear the President of the United States making these remarks? Is it an accurate statement? Is it a fair statement? Is it a reflection of one man’s opinion, or an indictment of the loss prevention industry as a whole? Regardless of your personal politics, a statement made with such conviction from the leader of our country sends a powerful message—and one that deserves our collective attention.

But when the comments were made by the President and repeated over and over by the press following the Trayvon Martin verdict, the implications were accepted by the general public with very little push-back. Why is that? If it’s a valid assessment, why hasn’t it been addressed more aggressively? If it’s not a valid assessment, why haven’t we been more forward or vocal in our objections? More likely, the general response—or lack thereof—is largely a product of many factors that can complicate the subject and lead us down difficult roads. Have we done enough? Do we need to do more? It is a highly sensitive topic, but it’s one that’s not going to go away or can be buried in the sand.

Macy’s reaches agreement over racial profiling allegations

Macy’s, Inc. today issued the following statement: “Macy’s has reached resolution with the New York State Office of the Attorney General related to allegations of racial profiling in our stores in New York. We also have settled in principle various lawsuits related to these allegations.

“To be clear, our company’s policies strictly prohibit any form of discrimination or racial profiling and any occurrence of such behavior will not be tolerated in our organization.

“Moving forward, our company will be initiating a series of measures including enhanced training and education for our loss prevention and sales associates. We also will be adopting an expanded role for our security monitor to help ensure that we have the right policies and procedures in place, and that we are constantly reviewing our compliance with them.

“We at Macy’s are committed to fulfilling to the ideals of diversity, inclusion and respect that our company aspires to achieve – every day, in every store and office, with every customer and associate.

Racial Profiling

Does Profiling Exist?

The media often asks me if retail store security personnel use “profiling” tactics as a means of determining which customers are most likely to steal. The answer is undeniably, yes.

Profiling is a Tool

The concept of shoplifter profiling is a proven loss prevention tool and is currently being practiced in most major retail stores by trained loss prevention or security staff. Does that seem shocking? It shouldn’t, as long as it doesn’t include the discriminatory practice of focusing on the race of the customer alone. Profiling is used everyday as a method for quickly focusing in on a person, a product line or a section of a store most likely to contribute to shoplifting. All investigative agencies including the police, FBI, and others have used profiling as a tool to narrow the field of possible suspects. Why shouldn’t retail store security be able to do the same? Store and customer profiles are developed during day-to-day operation and by collecting and analyzing inventory data. This data provides both a quantitative and a qualitative basis for determining where, when, how, and by whom shoplifting is likely to occur in the future.

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Loss Prevention and Solutions

September 23, 2014 by Leave a Comment

shoplifting1The Holiday season does not start for some weeks yet, but if you are in the retail industry preparations for the busiest time of year begins months in advance. The retail industry loses billions a year due to shoplifting and employee theft making prevention all the more significant and solutions to decrease shrinkage pivotal in the profits and loss of a store. Read more about loss prevention by following the links below

Taking the Bite Out of Organized Retail Crime   

“Store robbers…always work in gangs of two, three, or four in number, in order that their operations may be quickly conducted… The first thing to be done upon locating in a large town or city is to select the place upon which they design to work… When they finally decide upon a store to be robbed, they are fully posted with regard to everything that pertains to the business…”

A hundred and fifteen years ago, Allan Pinkerton, America’s “first detective” and founder of the Pinkerton National Detective Agency, penned those words in his book “Thirty Years a Detective: A Thorough and Comprehensive Exposé of Criminal Practice of All Grades and Classes”. In 2014, the tenth year that the National Retail Federation (NRF) conducted its Organized Retail Crime Survey, ORC has remained a staple of criminal enterprise in the United States, accounting for known losses in the neighborhood of $30 billion annually.

The Tactics of ORC

Organized Retail Crime (ORC) has been the bane of retailers for years and was first addressed by merchants in the late 1980s. Since then, ORC has grown into a yearly multi-billion dollar business that not only injures the retailer, but also the consumer, who has to pay higher prices. There is another loss — the one to communities in the form of lost tax revenue, which has a direct effect on state and local governments and school budgets causing a direct impact on the quality of life.

Since the early days, when ORC was first recognized, retailers have taken great steps to combat the crime. The most important step was the education of lawmakers who have passed laws across the nation combating Organized Retail Crime. Many of today’s retail trade organizations such as the National Retail Federation (NRF), the Food Marking Institute (FMI), Retail Industry Leaders Association (RILA), along with many other organizations have taken up the fight.

BearCom Informs Retailers on How to Use Two-Way Radios for Loss Prevention

BearCom, a nationwide provider of wireless communications equipment and solutions, offered suggestions on how two-way radios can help reduce loss during the busy holiday shopping season and all year round.

Loss, also called shrink, consists of shoplifting, employee or supply fraud, organized retail crime and administrative errors. According to Marianne Wilson at Chain Storage Age, “Growing shrink concerns have put loss prevention high on the agenda of retailers.”

“More than $100 billion worth of merchandise is stolen from retailers every year. That’s about 1.5 percent of retail sales, just in the United States,” said Hugh Johnston, Product & Purchasing Manager at BearCom. “The most effective way to prevent loss is to have a vigilant and visible staff in constant communication.”

Johnston gives some suggestions for basic shrink prevention that are especially important during the hectic holiday retail season:

Inconspicuous communications – When an employee needs to contact a manager or security personnel, they should do it in a way that doesn’t bring attention to the situation. Two-way radios with earpiece accessories enable quiet and discreet communication.

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Shoplifting News

September 18, 2014 by Leave a Comment

shoplifting2The people and the methods shoplifters use nowadays should not come as a surprise for any of us. From the elderly to the handicapped shoplifting is a crime that seems to have no age nor race attached to it. For a retail store, prevention seems the solution that makes sense, and can keep the store from losing its profits.

To read more about this follow the links below.

Shoplifting Suspect Shirley Mason Used Wheelchair Cart For Getaway: Cops

FRUITPORT TOWNSHIP, Mich. (AP) — Police in Michigan say they arrested a shoplifting suspect following her slow-speed getaway in a $1,200 motorized wheelchair shopping cart taken from a Wal-Mart.

The Muskegon Chronicle (http://bit.ly/1wgjeQT ) says police located 46-year-old Shirley Mason about 2 miles away, riding the cart with $600 in clothing.

A customer called police Monday night to report someone riding a shopping cart from the lot at the store in Muskegon County’s Fruitport Township.

Police say Mason told them she couldn’t find anyone to pick her up from the store and took the wheelchair cart “because she didn’t feel like walking.”

Authorities say Mason told officers she planned to sell the clothing.

Mason is charged with organized retail crime and has a probable cause hearing Sept. 23.

Mason doesn’t have a listed phone number.

Police: Mom and DAughter caught shoplifting

HOOSICK — State Police say a mother and her 23-year-old daughter were caught shoplifting from a supermarket. Vicki Meyers, 43, and her daughter Toni were allegedly seen by employees taking items at a TOPS supermarket and hiding them in their purses. According to authorities, they left the store with more than $70.00 worth of merchandise. The pair have both been charged with petit larceny.

Teacher accused of shoplifting using child

Wesley Chapel, Florida — A Pasco County teacher has resigned from her position, accused of shoplifting and using her young daughter to hide the stolen electronics.

Friday, parents are in shock that a trusted middle school science teacher sits behind bars.

Investigators say Amanda Hammon took her three-year-old on the shoplifting spree and had the child carry her backpack stuffed with the stolen goods from a Walmart in Wesley Chapel.

Hammon was a teacher at John Long Middle School in Wesley Chapel, and now, she’s a Pasco inmate without a job.

Investigators say this wasn’t just a one-time crime. In the past week, the middle school science teacher is accused of stealing electronics from Walmart four times with her daughter in tow.

Arrest records show Hammon confessed she’s been shoplifting to support her drug habit.

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Shrinking Margins? Internal Controls Can Help

September 18, 2014 by Leave a Comment

shoplifting4Occupational fraud is a problem for most businesses, both large and small. Fraud is committed when an employee, through a deliberate and usually illegal process, misuses or misappropriates the resources or assets of a business for their own benefit. It’s willful and deliberate worker misconduct, which causes the business to suffer financially due to theft of time, services, inventory or money.

This type of fraud is such a widespread and injurious problem that approximately 1/3 of small businesses close due to it, mostly because it goes undetected. This is a regrettable situation, because it’s largely preventable if properly monitored internal controls are in place. It’s usually uncovered only by accident or through a whistleblower.

Actively managed internal controls can prevent or detect most types of misappropriation of assets and fraudulent financial reporting. They’re processes created to track and achieve goals in specific categories (i.e. operations, time keeping, inventory, financial reporting and compliance with applicable laws and regulations). While most of these processes are universal, specific ones may need to be added to address unusual situations or particular fraud concerns.

These controls should include operations and finances. They’re designed to create a system which protects assets through prevention and timely detection of unauthorized or illegal employee behavior. Some of these processes include: monitoring the flow of paperwork; reading, understanding and acting on financial reports; noticing and acting on the behaviors and attitudes of employees; listening to and acting on employee tips and hints about problems.

To start creating internal control measures a business can review past and current procedures, events and concerns – the company’s strengths and weaknesses, investigate and evaluate employee complaints, acknowledge and list all of the problems/symptoms, etc. This is done in a methodical timely way. It’s important to note that the controls are fluid and will need to be reviewed and changed over time.

Well managed, easy to use and structured internal controls are considered to be one of the most effective deterrents to occupational fraud. However, these controls are only paper work if management doesn’t take action. No program, by itself, will keep employees from stealing. Supervisors must be responsible and take action if it’s to be effective.

Opportunity (lack of controls) and ineffective or no consequences are 2 of the main reasons employees commit fraud. It’s unreasonable and naïve for mangers to expect their workers to be atypical. Yet they do, only to be taken advantage of. Unfortunately, many have learned this lesson the hard way.

Nicole Abbott – writer, educator and psycho-therapist

 

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Security and Operational Compliance

September 9, 2014 by Leave a Comment

theft (4)According to the most recent articles from Loss Prevention Magazine, the three major areas where the management or owners have to be vigilant about are internal theft, external theft and operational compliance. These three security areas have to be implemented correctly and to adhere to procedures the management or security team have dictated to be successful. For more information about this and other topics follow the links below.

Security Breaches Trigger Retail’s Big Players to Call for Major Tech Changes

The possible credit card breach at Home Depot Inc. prompted the retailer to speed up its implementation of chip-reading credit card terminals. Major credit card companies, too, have announced they will accelerate efforts to bolster electronic payments security and protect sensitive customer data. These moves could have a large impact on consumer confidence, which has suffered as a spate of cyberattacks hit major companies. But for retailers especially, the implementation of the new systems will take time, and are not a panacea for a company’s security risks.

Home Depot CEO Frank Blake told investors Thursday that the retailer would activate chip-reading technology on its new credit-card terminals by the end of this year. He said the company is “working around the clock” to find a breach linked to stolen credit and debit cards,” the WSJ’s Shelly Banjo writes, but stopped short of confirming an actual breach occurred.

Building A New Defense Team

As technology draws us deeper into a new age of business enterprise, we are continuously bombarded with waves of challenges and opportunities involving those with malicious intentions. These attacks come at us from every direction as the ingenuity of these criminal minds seek new and creative ways to infiltrate our information resources and engage in cyber warfare against our businesses.

In order to survive these reprehensible intrusions, retailers must fight back. We have to defend our ground and take the necessary steps to combat the threat. This requires that we build and recruit the resources that will help us win the battles. We must become cyber warriors in our own right; defending our computer and information systems against those seeking to seize and exploit the lifeline of our business.

Operational Compliance: Inspecting What You Expect (Part 1)

The evolution of the loss prevention profession has required a change in the way that we view what we do and the way that we approach the retail environment.  First and foremost, we have come to recognize that shrink is a much more complicated problem than merely looking at the theft of merchandise.  Shrink is a very complex issue that must take in to consideration a variety of different issues that can lead to losses.  Shrink reduction is clearly seen as a vehicle of profit enhancement, and an integral part of the retail model.  Additionally, we have perspective on how we can influence company profitability in other ways as well, which has allowed us to set our sights on the bigger retail picture.  As a result our shrink management strategies require a multifaceted and broad-based approach in order to successfully design and administer the process.

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How Do My Employees Steal From Me?

September 5, 2014 by Leave a Comment

theft (13)A better way to look at this may be to talk about what they steal and break it down from there. Employees can steal four types of things: cash, merchandise/product, supplies (& tools, equipment…) and time.

Cash in a retail environment is king. But we tend to put the youngest, most in-mature and least trained person in charge of it. Cashiers tend to fit that description. That is a fact of retail life. But we can manage through that. We have to put procedures in place to deter theft. It has to start at the time of hire. A clear message both verbally and in writing needs to be established. After that follow up is key. Many times we let multiple employees ring up transactions on one drawer so there is no accountability. One way to counter this is through random cash drawer audits. These unannounced audits will show if a shortage has occurred. Action can then be taken. Many times employees stealing cash will accumulate it in the cash drawer before removing it. If your cash audit reveals an overage that maybe what you are dealing with.

Merchandise or Product regardless of what it is, is worth something to someone; that is why you are in business. So if an employee can steal it, they could take it for their own personal use or for resale. Again we have to set up an environment where it is known that this will not be tolerated. Many times when employees are caught stealing, the business owner keeps them employed and has them pay it back. OMG, thinking about this, pay you back with what? They were stealing in the first place. Most likely they will do so again to “pay you back”. Remember, this person has proved that they are the worst of the worst. Oh yes, there may be a sob story. But they stole your assets, the reason does not matter.

Supplies, your equipment or tools are often over looked. I once conducted an investigation for a major resort that had a problem with a few thefts from guests only. It turned out that hundreds of thousands of dollars were stolen in cleaning supplies, furniture, toilet paper, fuel, etc.

We tend to overlook this area because we think it could not add up to much. You have to get your head around that. A roll of toilet paper and a can of cleaning solution every few days add up. Multiply this by a number of people and the situation is quickly a serious loss. Audit your supplies. Investigate when tools or equipment come up missing. Hold people accountable. You should assign or make certain employees accountable for these items. They can and should control them.

Both merchandise and supplies can be removed from your business on the employee’s person, discarded in the trash to be recovered later, out with a friend that is visiting or in collusion with a vendor.

Time is often never thought of in employee theft situations but can be one of the largest losses. Employees steal time by simply falsifying time cards or sheets. For example, a co-worker friend clocks them in but they are not there yet. Even 10 minutes, two or three times a week adds up to big dollars. From personal experience in the over 2300 employee theft investigations I have conducted, it has never just been 10 minutes here and there. This type of theft becomes addictive quickly and will grow to large amounts unless checked.

Time can also be stolen by managers who have control of payroll. I once had a manager set up a fake employee with a bank account. He submitted payroll information and deposited the checks. He embezzled around $20,000 before we investigated him.

All of these types of theft can be prevented. Policy and procedure that is followed and enforced is your very first line of defense but there are other techniques. You can learn more about them in our live- in- person or webinar training sessions. Contact us if you would like more information at 770-426-7593.

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The Curb Rule

September 5, 2014 by Leave a Comment

theft (12)If you talk to anyone who works in retail security, they are probably familiar with something called the Curb Rule. It is a limitation made by many large retailers as to how far employees literally can go when they are making a shoplifting apprehension.

The Curb Rule usually states that when making a shoplifting apprehension, if the shoplifter attempts to flee, employees can pursue the subject as far as the edge of the curb of the store’s location. Generally, most stores have a sidewalk in front of them, and the employees should not go past the edge of the sidewalk in pursuit.

The ultimate goal of the rule is to keep everyone involved safe. The further away from the store employees go, the more likely it is that someone will get hurt. It’s not just about an altercation with a shoplifter either, even though a chased subject can be more pressured into trying to fight their way out of the situation.

In one particular incident, I stopped a shoplifter with a cart full of merchandise. The subject turned around and ran, almost getting hit by a car in the process. Had my witness and I gave chase, we most surely would have been hit ourselves. Remember, even shoplifters can sue a store/ company for personal damages if they are hurt during an apprehension.

One of my mentors used to tell stories of how he got a massive scar on his arm. He had been chasing a shoplifter who had climbed a chain link fence. My mentor, slipped while going over the fence, and the top barbs cut his arm. The shoplifter ended up jumping down an embankment and broke his leg. Needless to say, it was quite an expensive mess to clean up. Did I mention that all the shoplifter took was a twenty-dollar shirt?

The Curb Rule has its place as a safety feature as well as for maintaining profits. Often store and parking lot layouts dictate where the boundaries need to be made. Some stores who do not have a front sidewalk need to clearly inform employees of how and where to handle shoplifters, compared to stores with generous sidewalk areas.

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Revenue Versus Profits

September 5, 2014 by Leave a Comment

theft (2)During my last consultation, I had an interesting discussion with a business owner over the difference between high revenue and actual profit. He was under the impression that just because his business had consistently outstanding sales revenue that his business should be extremely profitable. He couldn’t understand why he was having trouble paying his bills and payroll for his employees.

I had to convince him that his sales weren’t where there was a problem. It was everything that was going on in the middle that was taking away from his profits. Somewhere he had operational breakdowns that were eating away at his incoming funds, preventing him from comfortably paying his operating expenses, and then leaving very little left over in the form of true profits.

The fact that he did have exemplary sales and revenue was probably the only reason why he was able to keep his doors open for business. Good sales are vital to a business’s longevity. Unfortunately, if the day-to-day operations are not efficient, all of the work put into generating sales revenue is easily rendered null and void.

Since we knew that he wasn’t having an issue with his sales, we started looking at some of the other possible causes for his profits to be eaten up. We started with his inventory. We looked at where he was spending his money and what he thought were the best and the worst selling products.

In one example, a particular vendor had been telling him that this particular brand was one of his best sellers. As such, the owner was putting in huge orders for the product. After taking a look at the actual sales and the actual on hand inventory, we realized that the sales did not justify the product he had on hand. In fact, based off of actual sales, there was 15 years worth of inventory. The vendor saw this business as an uninformed target and took advantage of it.

By eliminating this unnecessary inventory cost, the business owner was able to save several tens of thousands of dollars a year in lost profits.

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Shoplifting News and Other Stories

September 4, 2014 by Leave a Comment

theft (3)Employee theft costs the retail industry millions of dollars daily, and although the majority of shoplifters are non professionals, the monetary harm they can inflict to a business can be devastating. Employee theft can be undetected by the employer or management for months or even years, and some of the small businesses do not report the theft to authorities when the shoplifter is caught. How can you protect your business from employee theft or shoplifting?Are you doing enough to protect your business from losses? Do you need solutions for your business and don’t know where to start? call us and we will be happy to talk to you about your business needs.

To read more about shoplifting news follow the links below.

Employee at Wal-Mart in Franklin charged with theft

The Franklin Police Department received a complaint Friday about a possible employee theft at Wal-Mart.

Police were told that the employee, Timothy Youngblood, 43, who worked in sporting goods, stole about $5,000 worth of merchandise over the span of a few months, according to a news release from Franklin police.

Two Franklin officers watched store surveillance video, and officers recovered about $1,068 worth of Wal-Mart property from Youngblood’s East Cedar Street home. Police found sporting goods, tents, appliances, cookware, gourmet coffee and high-end coffee brewers.

Youngblood was charged with theft by unlawful taking over $500 but less than $10,000. His wife, Shawn M. Snay-Youngblood,

Pennsylvania’s top court rules $75,000 fine for employee’s theft at casino illegal

The state Supreme Court on Tuesday found that a mandatory $75,000 fine imposed upon a poker dealer convicted of stealing $200 from the Rivers Casino is unconstitutional.

“The fine at issue here, both in an absolute sense and in a comparative sense, is strikingly disproportionate to the manner in which other crimes are punished in Pennsylvania. That the fine is mandatory merely exacerbates the disproportion,” wrote Chief Justice Ronald Castille in the unanimous, 33-page opinion.

Matthew Eisenberg, 29, was charged with misdemeanor theft under the Gaming Act after taking $200 in poker chips from Nov. 26-30, 2010, from the gaming table where he worked at the Rivers.

Knox Trustee’s ‘ghost employee’ found guilty of theft

A Knox County jury on Friday agreed with the state: Former Trustee’s Office employee Delbert Morgan was a “mystery,” a “phantom” and a “ghost.”

He rarely if ever worked. And yet he collected almost $152,000 in salary and benefits during the four years he was with the county’s tax collection office.

The jury, after a two-week long trial, found the 58-year-old Grainger County businessman guilty of felony theft, a charge that is punishable by eight to 12 years in prison.

Morgan, who can also receive probation, will be sentenced on Oct. 23.

“He may have done a little work, but the state submits that it was bad from the beginning,” prosecutor Bill Bright told the jury during closing arguments Friday.

Fellow prosecutor John Gill agreed.

After the verdict was read, he said that Bright “did an unbelievable job making a complicated case clear.”

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