Staffing Levels Playing Into Retail Crime
Results of a new survey by the Retail Industry Leaders Association
(RILA) show that criminal activity at retail continues to grow.
According to
the 2010 Current Crime Trends Survey, 78 percent of retailers
report an increase in amateur and organized retail crime. Nearly three-quarters
cite an increase in stolen goods being sold in online marketplaces.
“We have
seen a steady increase in retail crimes over the last year as criminals continue
to take advantage of the economic climate to expand their activity," said Casey
Chroust, executive vice president, retail operations for RILA, in a press release.
"Not only are retailers presented with additional challenges due to these increases
in crime, but communities and consumers lose when the proceeds from these crimes
are used to fund additional criminal activity."
Derek Rodner, VP, product strategy
at the retail loss prevention firm Agilence, Inc., told RetailWire,
"The economic downturn in 2009 created a perfect storm for retail theft. Retailers
significantly scaled back expenditures and capital projects in all areas, most
significantly loss prevention. In addition, many retailers cut their LP staff
up to 50 percent. At the same time, more people were losing jobs and otherwise
honest folks were forced to resort to theft just to get by. These two factors
combined to cause a dramatic increase in shrink. Retailers are now redoubling
their efforts to combat this trend and are being forced into updating their
legacy technologies and procedures to adapt to the changing dynamics."
Roughly
one-third of retailers in the RILA study report that loss prevention/security
staffing models have changed due to economic circumstances at retail.
Gus Downing,
chief executive officer at Downing & Downing, told RetailWire, “Since
June of 2008, the nation’s retailers have eliminated
over 43 senior loss prevention executive positions due to the economy. Now
some were the retailers who went out of business, but the vast majority are
companies that have been hit hard by decreased sales and have been forced to
reduce payrolls with the senior executive dollars being the easiest to recoup
the quickest.”
In addition to executive and management-level cuts, Mr. Downing
said, “At the
store, payroll levels have been reduced obviously and in my opinion a conservative
number for LP would be around 15 percent to 20 percent generically.”
A reduction
in loss prevention staff is not the only issue in terms of crime levels, Mr.
Downing added. “The real problem has been the actual reduction of
sales staff in the store. We have literally tens of thousands of stores in
the U.S. opening each day with only one staff member on duty. Here lies the
real opportunity for ORC thieves and I assure you this is where they go.”
In
an effort to deter crime in the face of lower staffing levels, the RILA report
shows retailers have turned to a number of prevention methods including:
- Radio frequency (RF) electronic article surveillance (EAS)
- Increased use of exception based reporting and video analytics
- Electronic hiring and more diligent background checks
- Improved store level reporting
- Hiring of off-duty law enforcement to cover front doors during busiest
hours - Increased use of video surveillance systems
- Increased use of anti-theft devices like spyder wraps and keepers
- Store Management spending more time on the floor
- Offering store level associates incentives related to shrink reduction
- Detailed training of store management at the district level and of staff
in key positions within the store.
Discussion Questions: What is your assessment of the crime
picture at retail and what do you see as some of the best responses, in light
of staffing levels, to reduce losses?
Woodman’s here in Wisconsin started offering associates a significant monetary reward for catching shoplifters. This worked too well and now the local police want to put the theft value at $50 before they make an arrest.
I’ve seen Wal-Mart pulling out the self checkouts in difficult neighborhoods, moving the liquor to front, and closing the store at 10pm.
A few of my clients still use old fashioned physical intimidation where the locals know stealing from them is bad for your health.
There are a bunch of areas retailers must evaluate in this slow economy. As “would be” consumers walk the store aisles, there is no doubt that some are going to be motivated to attempt to steal something. Staff members are pushed to try their own methods of stealing. DSD vendors are also challenged. I always remember a discussion with a DSD vendor who said the best route was one that ended with a few chain stores. He was talking about packing out extra inventory, but in today’s economy it can also mean a few short deliveries in order to pocket cash from mom and pop deliveries.
Staffing levels must have a direct impact on shrink. On one hand, a thief depends on secrecy to accomplish their goal, the more staff there are around, the less opportunity a thief has to take something. But staff can also be the source of theft, so it is also important that organizations work hard to maintain the morale of their employees. The senior managers may be the obvious source for quick bottom line effects, but the impact on their staff may have a larger effect on shrink.
The challenge with using automation to detect and punish theft is the possibility of a “false positive.” The worst thing that can happen in any justice system is the false arrest of an innocent person. Statistically based screening and monitoring systems have built in error rates by nature. Retailers have to be careful when they put these systems in place to make sure they don’t falsely accuse someone of doing something. This is not just a moral question, but the lawsuits it could generate would wipe out any savings. Just like any tool, these systems require an intelligent operator.
Reading this item really got me aggravated. Three comments in the article really summed up the problem; and the solution. They are:
1.”Many retailers cut their LP staff up to 50 percent.
2. At the same time, more people were losing jobs and otherwise honest folks (They are not HONEST if they will steal) were forced to resort to theft just to get by.
3. They cut store staff to the bare minimum.
So payroll dollars went down but theft went up. WOW! Is that a surprise? They got what they deserved.
Either you pay less up front and do the job right or you pay more on the back end to fix the problem and do the job right the second time.
At the same time, I wonder if better staffing levels would also increase customer service, store appearance, and increase sales.
When will most retailers wake up and not only talk about the value of the frontline worker but actually walk the talk?
Retailers had to cut staff. That was a given. The caveat is obviously an increase in external theft. Unfortunately, our industry was not prepared for the onslaught of thievery. Now we are talking about a new group of shoplifters. People who would never consider the act have no job or income and are stealing to survive. It’s sad but true.
Merchants who are trying to accomplish more with less will find it difficult because of the volume and aggressiveness of shoplifting these days. One retailer I am worked with actually caught someone going into the lunchroom and stealing the staff schedule. How’s that for intelligence gathering!
Check out my post Shrink Check for ways to combat and control external theft.
It is a tough environment, but is seems strange with all of the new security measures that are in place that we would have this rise. Most stores are locking down milk. Yet the times are tough and if no one was monitoring the cameras, we would in fact see a rise.
Like Mel, I find that a number of remarks caught my eye (though 2 rather than 3):
“proceeds from these crimes are used to fund additional criminal activity”…so everyone really is going back to school, I guess.
“Otherwise honest folks were forced to resort to theft just to get by”… Jean Valjean lives!…I think not.
As to the general issue itself, there are two possibilities: either theft really IS rising, in which case this is a simple math issue–is the additional shrinkage loss more or less than the gain from LP staff reductions? Or it is NOT rising, and the RILA is simply trying to draw attention to an age-old issue by giving it a new spin. Given the lack of rigor in Mr. Chroust’s claims–“surveys say”–and the presence of more authoritative evidence–police reports–that contradicts the claim, I tend to believe the latter.
There are hundreds of techniques that can be used to deter theft. Easiest one is to place about a hundred cameras or fake cameras in the store and advertise that every square foot of the store is covered by cameras. The fact is that theft is bad at retail because the courts don’t take the crime seriously. If retail associations would lobby their local and state representatives to require a convicted thief to reimburse the expense of their crime and make a few examples of this (having shoplifters talk to school groups about their crime).
Fact is, shoplifting is a gateway crime. If juvies find that they can get away with it, the will move up to bigger jobs. Store personnel aren’t cops, so try and keep them out of the equation. Rely on your police force and if they complain, have a talk with your councilman.
Whining won’t cure anything. Cameras are cheap! Use ’em!