Sunday, June 26, 2011
Dallas Morning News
GRAPEVINE, Texas
Retailers never give up fighting the bad guys.
They’re adopting new technologies to protect against credit-card fraud and counterfeit bills. They’re hiring firms to conduct background checks on job applicants. Distribution centers are putting smaller, harder-to-detect GPS devices in cargo shipments.
Ink-dispensing and alarm-setting bulky tags still keep some goods from walking out the door. There’s even an alarm tag that can go into the meat soaker pad under a packaged T-bone steak.
“Oh yes, food and alcohol are high-theft items,” said Karen Bomber, marketing director at Tyco Retail Solutions, one of the companies pushing its wares last week at the retail industry’s loss prevention conference in Grapevine. Attendance was 2,800.
Retail theft keeps rising. Last year, retailers lost $37.14 billion, or 1.58 percent of total retail sales, up from 1.44 percent in 2009, according to an annual study by the National Retail Federation, the conference host, and Richard Hollinger, University of Florida professor of criminology.
The biggest share of those losses, 44 percent, was from employee theft. Shoplifting was second, with 33 percent, Hollinger said. Administrative errors, vendor fraud and unknown causes made up the rest.
The results are based on survey responses from 124 companies. Almost 19 percent of employee theft cases involved collusion between internal and external sources, he said.
“How does that old Pogo comic strip go? We have seen the enemy, and he is us,” Hollinger said.
New technology is about to make some efforts to stop retail theft obsolete, though it won’t happen overnight.
Take credit cards, said Joe LaRocca, the National Retail Federation’s loss-prevention staff expert. “We’ve spent 20 years adding holograms, expiration dates, setting up authentication numbers to call before a new card can be used — all sorts of things.”
“Now my credit cards are going to be on this,” he said, holding up his iPhone.
“New ways to shop will change a lot of what we do in loss prevention,” LaRocca said.
Cameras trained on cash registers have helped deter theft, but now clerks use hand-held checkout tools in the aisles and even in fitting rooms, he said.
Other retailers have started to follow Apple’s lead of sending receipts to the customer’s email account, LaRocca said. “Will that make it easier for people to walk out the door with more than what they purchased?”
Store maps are accessible on smartphones, and social media present some scary threats to stores, said Bill Titus, loss prevention manager of Sears Holding Corp. “When are flash mobs organized on Twitter going to start stealing from our stores?”
How-to-shoplift videos are easily found online, he said. “If you think the last 10 years were turbulent and required our stores to adapt, stand back for the next 10 years.”
Chris Penton, head of loss prevention for California-based apparel chain PacSun, decided six years ago to hire a systems analyst to crunch the huge amounts of data its stores generate in search of correlations.
He hired Liz Fitkin from the mortgage banking industry, who found discrepancies. In some cases, employees turned in “false returns,” in which they pretended to make a return, filled out the paperwork and kept the cash. She also analyzed how many items were being returned at once and whether customers asked for cash or a gift card to find theft patterns. PacSun used the findings to change its return policies.
Over time, Fitkin’s data mining showed there was no difference in employee theft between stores with $12,000 camera-monitoring systems and stores with no cameras.
“The needle didn’t move with the cameras, so we quit installing them,” Fitkin said.
Fitkin’s presentation created quite a buzz in the conference’s exhibit hall, where companies that sell camera systems and alarm tags still dominate.
Clinton Electronics of Loves Park, Ill., sells monitors visible in store aisles.
“Watching yourself on a monitor keeps some people from shoplifting,” said Clinton salesman Jason West. The company is testing 8-inch monitors in the high-theft plumbing fixture aisles of a home improvement chain. “So far, it’s reduced theft and increased sales.”
Tyco’s new reusable radio-frequency hard tags for garments double as anti-theft and inventory-counting devices, Bomber said. “If the store doesn’t know a shirt is missing in a certain size, it’s not going to make that sale.”
Not all stores have employee theft problems, Hollinger said, but every retailer has to watch out for professional thieves.
Even LifeWay Christian Stores loss-prevention director Melissa Mitchell said DVDs, CDs and other resellable items are stolen most.
Even Bibles are shoplifted, she said. “It’s not any more bold; it just feels more wrong. But for us, it’s not so much employee theft as professionals who peg the stores as easy marks.”
And she explained why the company believes employee theft isn’t a big issue for LifeWay.
“As part of our huddle in the morning, we have devotion,” she said. “It’s a different dynamic for us when you pray for your co-worker’s sick mother in the morning versus working at a store where you don’t even know your co-worker’s name.”
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