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[12 comments]

Retailers Challenged by Racial Profiling Issues

December 19, 2013

Barneys and Macy's have brought to the forefront of the American consciousness the issue of racial profiling by retailers relative to shrink, and, in the process, have placed a challenge before all retailers: How can it be prevented in loss prevention activities?

The story begins quietly enough with the purchase of an expensive designer belt by an African-American man at Barneys in New York City in April. On completion of the transaction, store officials allegedly notified police detectives who were in the store and two plainclothes detectives stopped the shopper in the street and detained him for several hours until the debit card payment was found to be valid. Some months later, the man sued Barneys and the NYPD for racial profiling, and press coverage of the incident prompted similar lawsuits, one of which was directed at Macy's.

Barneys' initial response was to conduct an internal study, which claimed that the police acted on their own; the NYPD answered that the detectives acted on information supplied by store associates. The chain also denied any racial profiling by its staff. In any event, African-American leaders were outraged, an inquiry by New York's attorney general ensued, and days of bad press in the local tabloids arrived for Barneys and Macy's. Negative coverage even included an exposé of Macy's "Room 140" in which accused shoplifters supposedly have been interrogated and subjected to duress to admit guilt.

Earlier in December, the retailers created, in cooperation with New York's African-American community, a Customers' Bill of Rights to be posted in store. This document commits retailers to treating shoppers with respect whatever race or gender, prohibits unreasonable searches, and recommends enhanced sensitivity training for store associates.

As a backdrop to these developments, retailers have long experienced high levels of shrink and feel vulnerable in an open display/self-service environment. The NRF places total shrink of all types at 1.8 percent. But retailers generally operate on narrow margins. Macy's for example has a net-to-sales ratio of less than 5 percent. Due to this, retailers tend to be extremely sensitive to all forms of shrink and go to great lengths to prevent it. Indeed, prior to the April confrontation, Barneys brought in a new security team and instituted new, more aggressive anti-theft tactics in store, a move that apparently opened the door to this incident.

Discussion Questions:

What's the best way to handle potential shoplifting suspects? Did Barneys handle the incident wisely? How can the need to prevent practices like racial profiling be squared with sound anti-shrink policies?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

When posted, will the Customers' Bill of Rights at Barneys and Macy's reassure customers that they will be treated with respect and not discriminated against?

Comments:

Barneys' "internal investigation" showed they were not acting irresponsibly. What a surprise. NYPD the same. Totally wrong for both of them. Posting a customer rights is not going to change anything until the employees are trained in how to treat a customer with respect.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

If every one of these bigger stores had adequate coverage where every employee could welcome customers by looking them in the eye, shrinkage would be much lower. Theft happens because no one is looking.

When someone is now looking to try and "see" who is a shopper based on their skin color or dress, a line has been crossed.

These types of stories, along with data breaches, are what continues to drive customers to pause when thinking of going out of their way to shop a big box. It's easier to manage omnichannel than look at the uncomfortable facts that they've managed their business down to increased theft, employee turnover and lower conversion rates.

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Bob Phibbs, President/CEO, The Retail Doctor

Obviously Barneys handled the situation incorrectly. However, the posting of a bill of rights for consumers will have little or no effect on customers. In fact, the promise of restraint might make those inclined to steal less afraid of the retailer.

One way to lower shrink is to have a presence in the store. I have personally had to hunt down employees at a Macy's store to help me or check me out.

Retailers should treat all shoppers with consistent practices, training can certainly help accomplish that goal.

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J. Peter Deeb, Managing Partner, Deeb MacDonald & Associates, L.L.C.

The notion of a Customer's Bill of Rights, while perhaps noble on the surface, is in reality a cosmetic attempt at addressing deeper underlying issues.

Shrink is often the outcome of leaner store and department staffing models, while customer profiling surfaces in the absence of staff sensitivity and customer rapport training, while also placing generally disengaged third-party security personnel on the sales floor.

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Jeff Hall, President, Second To None

The root problem here is antiquated retail practices in place by High Street luxury retailers. From Michigan Ave in Chicago to Madison Ave and Rodeo Drive, I feel extremely unimpressed and underwhelmed at "boring" high street luxury retailers who rely on elitism instead of a best-in-class retailing experience.

The biggest problem I had with these stories is how so-called High Street luxury retailers who want to charge customers $300 for a belt do not have an $3,000 RFID system in place to control inventory. In addition, customers are treated in an 18th century snobbish fashion versus having trained sales associated with data on hand to learn more about the customer who walked in the door and help them find what they want.

In my opinion, High Street luxury retailing is a dinosaur about to go extinct real fast if they cannot adopt state-of-the art retail practices to replace the snobbish, ambiguous high-brow activities. All of these issues were highly avoidable if these High Street retailers invested in retail technology with the same passion as they overcharge for their luxury items.

Ed Dunn, Founder, (Stealth Operation)

I have always been struck by retailers' backwards focus on loss prevention. EVERY retail store has a video screen positioned just as you enter to let you know you are being watched. Even the so-called greeter one encounters as you enter a Walmart is actually there to insure shoppers don't go out the entrance with merchandise.

Peter Deeb has it right. The more people a retailer has on the sales floor, the less opportunity there is for shoplifting.

As retailers shrink the number of sales people, they increase the opportunity for shoplifting. This is called "blow back" or "unintended consequences."

Shrink is now and has always been a major problem. Profiling is a kind of shorthand which becomes necessary as the number of sales floor personnel and their contact with shoppers decreases.

Maybe more sales help better trained to service shoppers could be an answer.

Martin Amadio, President, Inity InStore

I like Costco's method. First charge people $55 a year to shop their store. That weeds out some potential thieves. Then have an employee look at each item that leaves the store to make sure there is a receipt that matches. Costco profiles everyone equally.

Barneys did what they had to do and sometimes mistakes are made. What was not mentioned were all the people they did catch shoplifting, regardless of how they were profiled.

David Livingston, Principal, DJL Research

Incentivize all employees to reduce shoplifting and improve customer service. Acknowledge every potential customer walking into your store, pay special attention to items that can be shoplifted, and supervise the dressing rooms.

The presence of employees and good customer service reduces the shoplifter opportunity and providing an incentive to employees gives them ownership of the store and its merchandise.

Barneys could have avoided the incident with a policy requiring a picture ID for a credit card purchase. If the customer is using a debit card, then the second ID is not necessary because the customer has to know the personalized PIN number.

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Carlos Arámbula, Managing Partner, MarcasUSA LLC

This topic has been very ably commented on so far, and I have but one observation that may be helpful. The off-shelf displays and freestanding product shippers that retailers stuff into their stores during the holidays can baffle even the best camera monitoring systems. Shoplifters use these aisle impediments to hide their concealment moves in tight areas with no clear lines-of-sight for monitoring systems.

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M. Jericho Banks PhD, President, CEO, Forensic Marketing LLC

The rights of the individual and a business continue to impede the market with product price increases that are made necessary to cover shrink and litigation losses. There are thousands of buildings filled with people engaged in the protection of rights and property, with the purpose of protecting their interests at any and all costs, paid for by the consumer and/or end user. Our laws, new and old, seem to perpetuate these conflicts instead of protecting all of us against being wronged in any way.

The insurance industry has seen some positive results in limiting consumer and company burden, but much more can be done. As for the idea and or implementation of a bill of rights, this must be all encompassing for fairness reasons. Anything less than protection for all parties is simply the creation of sanctioned oppression.

'gjarnoldjr'

For many years there has existed a very simple theft triangle graphic that encapsulates the reasons for shrink - motivation, opportunity, and lack of detection. Retailers can do nothing about the first two and therefore must concentrate on the third. I view the third a little more broadly to likelihood of detection.

I agree with all the comment about eye contact, having, people on the floor, RFID tags, etc. Having a consumer fairness pledge is not the answer. It lies increasing the to lessen the risk of detection. As other have pointed out the are a variety of ways this can be accomplished.

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Steve Montgomery, President, b2b Solutions, LLC

Some thoughts:

There is right and there is wrong.

Would basic customer service training suffice or is a level of sensitivity training needed?

When Loss Prevention carries more cachet than Sales, someone will go over the line.

No matter how established your business is, one incident can lead to major damage control.

If just one customer suffers humiliation and embarrassment in your business, it can have severe consequences through both social media and in your bottom line.

The amount of money you spend in training is miniscule compared to what you will spend in damage control.

Alan Cooper, Contract Trainer/Training Consultant, Independent/Freelance

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