The Bunker Blog

Seems like there is no shortage of stories about the rising rate of shoplifting and internal theft today.  Most of these news stories either directly or indirectly blame the rise on the recession.

There is also no shortage of new incidents like this one in Mississippi, where several employees at a local retailer were involved in a fraud scheme where the were paying either very little or nothing for merchandise from the store.

At the same time, retailers across the country are trimming down their loss prevention departments. Payroll budgets are getting slashed, and many jobs have been lost in efforts to cut costs and increase profitability.

With less bodies in the stores serving customers; less LP agents on the floor protecting the merchandise; and with retail crime already on the rise; things sure don’t look good for retailers’ shrink lines this year.

I still say this economic recession is an excuse when it comes to theft. However, employees whose schedules have been cut, who see that their company is cutting costs, starting with payroll; may be tempted to subsidize by stealing from their company.

Folks recently unemployed may take to stealing as a “means to survive”, at least  that is how they would justify it.

The fact is, this whole situation looks like the “perfect storm” when it comes to increased shrink. Sales are down, theft is up; there are less people protecting the stores, and more people stealing from them.

There are a lot of displaced LP agents out there who have recently been unemployed themselves. The jobs that do become available will be tough to get because there will be many more applicants than normal. This gives retailers the opportunity to stack the deck with their retail LP teams.

I have a feeling that some of us (retailers) are going to have that “punched in the gut” feeling when we see the numbers this year. It’s bad enough to see sales going down. Add increased shrink to that scenario, and well, you know what I mean.

We have to be prepared for, and expect the worst. At the same time, we have to continue to meet each new challenge with a renewed determination to hold the line. We may not make many huge gains in the war on shrink this year, but we can at least win a few battles, and make sure the enemy takes some casualties, as we hold the line on retail shrink for 09.

Good luck to us all. As always, feel free to comment. Discussion is welcome and encouraged.

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One of the most valuable tools in loss prevention is the ability to create the perception of control. In other words, employees, customers, and would-be shoplifters must always believe loss prevention is watching, even when they are not.

A simple example of this is when loss prevention agents are conducting surveillance, whether on the sales floor, or in a camera room. Obviously, the LP agent can’t be everywhere all the time. He also can’t be looking at every customer at all times. But, the LP agent does see everyone coming and going at some point while watching his/her store. The perception of control comes into play when the would-be thief believes that he/she is either being watched, or could be watched at any moment.

Of course there are many other methods used by loss prevention to create the perception of control. Everything from signs at fitting room doors to posters on break room boards; from audits of paperwork to integrity shops. And there are many more that we won’t mention here.

The fact is that, without the perception of control, it would be pretty difficult to do our jobs. This perception of control also tends to motivate honest employees to call out suspicious activity to the LP agent, making investigations go much more quickly in most cases. It comes down to a simple fact: If employees, customers, and thieves perceive that loss prevention is in control, then they are.

Is it all smoke and mirrors? Of course not. But, there are tricks of the trade that allow loss prevention to “be everywhere and see everything”, even when they can’t.

We are all hearing the warnings. We are seeing the increased rates of both shoplifting and employee theft. It is urgent that we all use every tool available to us to deter as much theft as possible, and to recover as much as possible to protect our profits and shrink lines. Now is not the time for business as usual. Loss Prevention professionals must do more with less, and still hold the line on shrinkage.

Technorati Tags: retail loss prevention, loss control, inventory shrinkage, loss prevention, employee theft, shoplifters

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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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Every successful business sets goals. In fact, most businesses have many goals, both short term and long term. Sometimes, though, small and medium sized businesses may overlook one very important goal: The shrink goal. To reduce shrink, you need to know your current shrink level, have a plan to reduce it, and have something (a goal) by which you can measure the effectiveness of your efforts. Jim Lockwood, at SevenActions.com, has written a great article on setting SMART goals. These same principles can be applied to setting shrink goals. Here is how:

• Specific Goal – Specifically, how much shrink is acceptable? Most of us would immediately answer, “None”, but that is not realistic in most cases. Businesses need to understand what shrink is, and then set a goal as to what is the acceptable number, in dollars, and as a percent to sales.
• Measurable Goal – This is where you need to know your current situation. You’ll need to take inventory to see what is “lost”. Spot checks throughout the year on high shrink items will help you measure progress, and then a follow up inventory, at least annually, will give you your results.
• Achievable Goal – Don’t set a goal that you don’t even believe you can reach. This is very important. If you have a high shrink level, an achievable goal may be to cut that shrink by 20% over the next year, or it may be achievable to cut it by 40%. If you believe it is possible, after identifying the causes, to reduce shrink by 40%, then it is.
• Reasonable Goal – It is not reasonable to expect to eliminate all shrink at once. Most of the time, shrink is reduced incrementally by eliminating the current causes, and then reacting to new causes as they arise. With the right plan, and a real commitment to reduction of losses, it is reasonable to expect to lose less than 1% of sales to shrink.
• Time-Based Goal – Set a date by which you want to achieve your shrink goal. Give yourself a year so that you have a full year of sales to compare with your losses and have a true read of your shrink as a percentage of your sales. However, you can also set “waypoint” dates where you can perform mini-inventories in high shrink areas so you can re-direct your efforts and revise your plan if necessary.

Because a reduction in shrink equates to a huge increase in profits, it is absolutely worth the time and effort to set a shrink goal and hold your business, and yourself, accountable for reaching it.

Technorati Tags: retail loss prevention,retail shrink,shrink reduction,shrink goal,lp best practices

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