The Bunker Blog

Here is a news story from WNYC about the increase in shoplifting incidents in New York City since the beginning of the recession. You can listen to the news report below:

But in my experience, I have seen a significant increase in internal theft cases, also, since about the beginning of the third quarter of 2008. The cases have also been much larger in terms of value, too. These, to me, are a much bigger problem than the rise in shoplifting incidents.

A dishonest employee, on average, will be responsible for about eight times more loss than the average shoplifter. Since this economic downturn, most retailers have cut payroll and other benefits in efforts to survive. Employees have been severely impacted by that, and in many cases, have made the decision to subsidize their incomes by stealing.

When employees begin working together to steal, like in this case where Walmart employees were working together to allow thousands of dollars worth of merchandise out the door, the losses could potentially be catastrophic.

What doesn’t make sense to me is that many retailers are cutting the very departments that can protect against these kinds of losses. Loss Prevention agents are losing their jobs daily, and are falling victim to the same cuts that are causing otherwise good employees to make the decision to steal.

Anybody want to weigh in on this?

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As usual, the Christmas Season has brought out the best, and worst, in people again this year. I know I have been extremely busy for weeks now, and this week has been no exception.

In Witchita, KS, two female shoplifters used a stun gun on Walmart loss prevention agents who apphrehended them for shoplifting a cart full of clothing.

In Fort Meyers, FL, two shoplifters were caught shoplifting hundreds of bottles of lotions and gel from Bath & Body Works stores across Florida. Police estimate the pair stole around $80,000.00 during their spree.

In Denver, CO, fleeing shoplifters Julie Skelly, 34, and Dustin Hyatt, 31, ran over a Walmart employee’s foot while escaping in a pickup truck. The two were later arrested with over $2500.00 in stolen merchandise in their possession.

In Gilbert, AZ, Kentucky Fried Chicken employee Melissa Kess is charged with stealing a customer’s credit card. She and her boyfriend then used the card to make multiple purchases at area businesses.

In Bowling Green, KY, a shoplifting suspect grabbed a pair of scissors in the loss prevention office and threatened the LP agent with them. She is now charged with second degree burglary for her trouble. (Just a side note here; that’s why we teach LP agents to make sure anything that can be used as a weapon is out of reach when we bring a shoplifter into the office for processing.)

In Dover, DE, 22-year-old Christopher Russom stole cologne from a local Sears, and then attempted to lead police on a high speed chase. Police noted his license info, stopped pursuing, and then went to his home and arrested him. He was charged with multiple charges.

In Palm Beach, FL, an accused shoplifter pushed and bit the store manager at a Publix where he had just attempted to steal $38.00 worth of merchandise.

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These tough economic times create real challenges for all of us in the loss prevention industry. Many retailers are closing doors, meaning lost jobs, including loss prevention jobs. Those in the industry who are still working are, in most cases, being asked to do more with less.

With retailers looking to cut costs, loss prevention programs can be viewed as non-essential, and therefore be either cut back or altogether cut from the budget. Retailers are looking to save money where ever possible, and loss prevention is in a position to either show real savings through shrink reduction or face cutbacks in many cases.

One would think that the increase in criminal activity against retailers would secure a position for loss prevention professionals at every retailer, but this may not be the case.

SecurityInfoWatch.com posted an article by Mark Doyle of Jack Hayes, Intl today that summarizes the latest Annual Retail Theft Survey. Not surprisingly, the survey found that overall apprehensions were up 10.8% over 2006, and recoveries were up 9.73%. What was surprising was that the average case value was actually slightly down, at -0.33%.

According to a survey conduct by Aberdeen Research back in October 07, 60% of retailers reported shrink of 1.75% or more for that year. And friends, that’s where the real bang for the buck exists. Having an increase in cases is great, and indeed does help to reduce shrink. But if the shrink percent is high, then something is not working.

This same survey also found that retailers see four major challenges when it comes to their shrink reduction strategies. They are listed below in order of importance:

1. Lack of Employee Training On Loss Prevention Procedures
2. High Incidence of Internal Theft
3. Store Location Demographics (Crime Rates, etc.)
4. Organized Retail Crime

You’ll notice that the top challenge or concern is training. If associate awareness is low, shrink will be high. Loss Prevention must go beyond the weekly meetings and become intimately involved in the LP training in stores. That means one on one, personal training of key employees who will pass along the information and help to build a culture of awareness.

Next on the list is Internal Theft. Since 40 – 50% of shrink is attributed to employee theft or fraud, it only makes sense to put the investigative focus in this area. Shoplifters are a problem, but not THE problem in most locations. The biggest issue employers face when it comes to losses is the fact that up to 30% of their employees are stealing from them at any given time.

Store location issues are a tough problem. I recommend regular risk assessments. That means going to the local police department and requesting property crime statistics. For about $10.00, you get a great deal of information that, along with your specific shrink results, will help you customize your strategy for shrink reduction. I also recommend networking with other local Loss Prevention departments and sharing information about habitual offenders, high theft items, etc. Together, this information can really make a difference in how you protect your merchandise.

Finally, retailers are concerned about organized retail crime. There seems to be some debate in loss prevention circles as to just how much of a problem this is. On one hand, there are those who maintain that ORC is a huge contributor to retail shrink, and that the answer is to work with law enforcement to go after the leaders.

On the other hand, there are those who argue that, if proper training, awareness, and protection standards are in place, ORC is a minimal issue because the boosters are being stopped before they can seriously impact shrink.

Both sides make good arguments, and I think it will take some time before we see which approach makes the biggest impact on the problem.

So, loss prevention professionals face tough challenges in tough economic times. My goal here is to share the “big picture” concerns of retailers in general so that LP professionals can manage their workload and focus to make the biggest impact possible on the shrink in their stores, markets, etc.

But we also have to be keenly aware of what our companies’ specific goals, challenges, and concerns are. At the end of the day, it’s about the shrink. If you catch 1000 shoplifters and dishonest employees, but your shrink remains high and unchanged, then the focus needs to be re-assessed.

So, how about it? Do you agree? Disagree? Want to add your own thoughts? Please leave a comment so we can discuss.

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Police in Mesa, AZ have arrested six people in connection with the theft of over $5,000.00 in merchandise from a local Mervyn’s on Sunday, October 26th. Loss Prevention observed a 16 year old cashier helping the others by charging very little, or nothing at all, each time the group would come to her register with merchandise. Two more subjects are being sought in connection with the thefts.

According to reports, three adults and three juveniles have been charged in the case so far.

This is the classic pass-off, under-ring scenario.  The cashier’s friends come to his/her register with hundreds of dollars worth of merchandise. The cashier then proceeds to “pretend” to scan and ring all items, but in actuality, is only scanning one or two low priced items. The items are then bagged, the receipt given to the “customer“, and hundreds of dollars worth of merchandise walk out the door, unpaid for.

Of course, there are ways to identify this type of theft. Between tools and training, loss prevention agents are usually pretty good at catching on to this scheme pretty quickly. This was a big win for the LP team at Mervyn’s.  I won’t be surprised if we hear later that there is even more to this story.

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A couple of days ago, I wrote about Rosita Davani, the regional Loss Prevention Director for Nordstrom who, along with other former LP agents, was operating a theft ring that stretched from Pennsylvania into Virginia and Maryland. In all six people have been arrested in connection with this case, with possibly more arrests to come.

Here is another case where at least one employee is involved in an organized retail theft scheme targeting his company. Safeway employee Anthony Ruiz has been arrested, along with three other individuals, for stealing cosmetics, over-the-counter drugs, and other merchandise, which was then sold through online auction sites. Estimates are that Ruiz stole more than $60,000.00 worth of merchandise.

Several years ago, before all the buzz about organized retail theft, I was involved with a case where an employee was pushing merchandise out of a store, where it was loaded onto a van, shipped to a storage facility, then sold off at flea markets or online. The employee admitted to stealing $80,000.00 in merchandise. It was a huge case, but it was also very frustrating to know that he had been able to take tens of thousands of dollars worth of merchandise out before we identified the issue.

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