Retailers are beginning to stop the bleeding. The surprising results of a recent study show that the flow of stolen items out of their stores has gone down slightly, despite the bad economy. On the contrary, the recession served as a catalyst to step up efforts to combat theft with more training and technology.

In the U.S., the rate of retail theft as a percentage of sales dropped from 1.51 per cent or $36.5 billion in 2008 to 1.44 percent or $33.5 billion in 2009, according to the National Retail Security Survey conducted by the University of Florida.

More sophisticated security tags and video surveillance are now being used, but staff training has also played a key role in the overall decrease, says Wayne Bidwell, N.Y.-based business development manager at Bosch Security Systems.

“I would attribute the reduction firstly to staff training, and secondarily to technology. There’s been a lot of focus on education throughout the chain of command in retail,” says Bidwell.


West 49 marshals its troops
The bleak economic outlook last year galvanized many retailers into action. “We weren’t willing to lay down and accept defeat in the face of that,” says Jen Richard, director of resource protection at West 49 Inc., a Burlington, Ont.-based chain of 135 stores across Canada that sells trendy apparel, footwear and accessories.

West 49 has managed to reduce its shrink substantially over the past year, says Richard. “We ramped up our training and awareness program with our field management and sent out a battle cry, telling them exactly what our LP (loss prevention) goals are, what our attack plan is, and the specific contributions we expect of them.”

The company is open and transparent about its get-tough strategy, and offers incentives by tying compensation to the way staff manage shrink, she adds.

The multi-pronged strategy included training on how to identify shoplifting behaviour and employee dishonesty, monthly and quarterly operational audits, and greater scrutiny of inventory processes.

Internal theft is a bigger contributor to loss at West 49 than shoplifting, she says. “We mostly get amateur theft rather than professionals, organized crime or counterfeit rings. We get a lot of incidents like kids switching out their shoes and leaving their old pair in the box, and security tags literally ripped out of hoodies leaving fabric behind – so they’re not even using tools.”

While these are a big concern, losses were greater in internal incidents such as freebagging, where staff go through the motions of ringing items through the cash register but in fact don’t, and sweethearting, where staff allow their buddies to benefit from discounts, she says.

The company already had a whistleblower line in place, but did a blitz campaign every quarter with posters and other reminders to let staff know how to use it and what incidents they should report.

The audit component focused on inventory processes, says Richard. West 49 started conducting operational audits for the first time, rolling them out across the chain, and instituted more procedural controls.

“There are huge opportunities to reduce internal theft by improving accuracy. Without controls, this can lead to internal risk like stores modifying receipts for a shipment of 100 items and claiming they only got 90, which makes it look like a shipping error.”

Richard also invested in video analytics to combat theft, but had a bad experience with her first vendor, and had to turn to other vendors to get the system up and running.

“The first vendor made promises but didn’t come through. That company is going through some management changes, and still hasn’t delivered software updates. The analytics at entrances for people counting was supposed to be part of the basic program, but it still hasn’t been implemented. But Check Point and i3 have been great partners and completely open about what they’re going to do for me.”

She says she’s reviewed some of the newer anti-theft technology offerings, and they all have their pros and cons. “I like where vendors are going with video analytics tied to POS transactions to produce visual exception reports. But it’s too bad these systems aren’t affordable, as I’d love to integrate the two.”