Loss Prevention Word Cloud

Combatting Theft-Retail Security for Small-Box Retailers

Retail loss prevention can be a rewarding profession. I have worked for some of the biggest retailers in the U.S. There is something about apprehending a shoplifter or dishonest employee and recovering stolen merchandise that gets the adrenaline pumping.

Below is information that is basic to any retail loss prevention program, based on my knowledge and experience gained over a nine-year career.

But what is loss prevention?

Loss Prevention Defined

Loss prevention is a system of policies and procedures that will prevent inventory shrinkage and loss from theft and fraud within a business. Inventory shrinkage and loss can be caused by internal theft (employee theft), external theft (shoplifting), vendor fraud, and paperwork errors.

What is Shrinkage?

Shrinkage, in the simplest terms, is the difference between book inventory and physical inventory. Book inventory is what the inventory management system says is on-hand. Physical inventory is merchandise that you can physically put your hands on out on the sales floor.

The difference between the two is the “shrinkage,” measured as a percentage to actual sales.

According to the 2019 National Retail Security Survey put out by Dr. Richard Hollinger at the University of Florida, in partnership with the National Retail Foundation: In 2018, theft, fraud, and losses from other types of shrink totaled $50.6 billion. Shrink averaged 1.38% of sales. Employee theft averaged $1264.10 per incident. Shoplifting/Organized retail crime (ORC) averaged $546.67 per incident.

Shoplifting

People who commit the crime of shoplifting should never be profiled or discriminated against. During my loss prevention career, I have apprehended shoplifters as young as 11 years old and as old as 67. I have apprehended very affluent people and those of the middle class. Shoplifters come from all social-economic backgrounds, all ages, all races, and all ethnic groups.

Those who commit theft through shoplifting will exhibit suspicious behaviors before committing the theft: looking up at the ceiling to see where the CCTV cameras are; avoiding help from sales associates; they will look around nervously to see who is around and watching them; and selecting multiple pieces without regard to size, just to name a few.

It is these behaviors that will prompt an loss prevention investigator to initiate observation of a suspect. Be sure to keep a keen eye on their hands.

They say that the “eyes are the windows to the soul.” But shoplifters steal with their hands.

Shoplifters will steal for three reasons: (1) on impulse, just to see if they can get away with it. (2) to steal merchandise to sell on the street to buy drugs. (3) and there are those that steal for a living, selling stolen merchandise for a profit such as organized retail crime groups (ORC).

Most retailers employ trained, in-house loss prevention personnel. Every retailer is different in how their loss prevention policies and procedures are carried out, especially as it relates to shoplifters.

Some retailers are hands-on, meaning they will physically apprehend a shoplifter. Others are strictly hands-off, opting to engage a shoplifter verbally and defuse the situation and encourage the offender to return inside so that stolen merchandise can be recovered.

The 5 Steps

But there is one aspect of apprehending shoplifters that all retailers will agree on: following the 5 steps.

When apprehending a shoplifter, the 5 steps are:

  1. Approach the merchandise
  2. Selection of the merchandise
  3. Concealment of the merchandise
  4. Continuous surveillance of the suspect
  5. Exit the store

Let’s look at each of these steps in greater detail. Again, these steps are based on a person exhibiting suspicious behaviors.

Step 1-Approach: A loss prevention investigator must observe the suspect approach the merchandise, and observe suspicious behaviors, such as looking around nervously to see if anyone is watching, avoiding help from the sales associate, looking for CCTV cameras, etc.

Step 2-Selection: The suspect must be observed selecting merchandise from the display rack. Again, watch for selection of multiple pieces without regard for size or removing garments from hangars on the sales floor.

Step 3-Concealment: The suspect must be observed concealing the merchandise inside a shopping bag or on their person underneath their clothing.

Step 4-Continuous Surveillance: A LP investigator must maintain continuous surveillance of the suspect at all times to ensure they are in possession of the concealed merchandise and they haven’t had a change of heart and dumped the merchandise somewhere in the store.

Step 5-Exit the Store: The suspect has passed all point of sale registers and exited the store, failing to pay for the stolen merchandise in their possession.

Only after all five of these steps have been met should a shoplifter be apprehended, based on company guidelines and procedures.

Failure to abide by these five steps can expose a company to severe liability issues. If an investigator misses one of these steps and still makes the apprehension, but the suspect has no stolen merchandise in their possession, then the investigator just opened up the company to a lawsuit and they just lost their job.

If you didn’t see it, it didn’t happen.

A better course of action would be if you feel the suspect has stolen merchandise, but you lost continuous surveillance of the suspect, do not approach them. Just let them go.

Document the incident and pull the video. Now you know what the suspect looks like and what brand of merchandise they like. Now you can focus attention on that area and you will catch them next time.

Shoplifters are greedy. They will always come back. Why? Because they got away with it the first time.

Shoplifters Steal in a Variety of Ways

People who shoplift do so in a variety of ways: Aside from straight concealment on the sales floor or fitting room, they can also steal in the following ways:

  • Ticket Switching: Removing a high dollar price tag and replacing it with a lower price tag.
  • Return Fraud: Returning stolen merchandise to get store credit (because they did not have a receipt). This is achieved by stealing merchandise from one store and returning it at another.
  • Credit Fraud: Using a stolen Visa/Mastercard or store credit card to make purchases. Some retailers have robust data systems in place when it comes to store brand credit cards. These systems can retrieve customer information such as name and address, alert that the card has been stolen, and any recent suspicious activity.
  • Counterfeit Money: Presenting cash money for payment at the point of sale that looks real, but is actually counterfeit because it lacks the embedded security features. This can be determined by marking bills with a pen to see the color change, or holding the bill up to the light to see the embedded security strip or watermark. But often, the presence of counterfeit bills is determined after the fact, long after the transaction is completed and the offender has left the store.

Loss Prevention Going Forward

Retail theft is in the billions of dollars. There is a need for well-trained, seasoned loss prevention investigators, as well as technology deployed at the store level and in the supply chain.

The old saying goes “security costs money, it doesn’t make money.” It’s true, security is always an overhead expense.

But I would argue that a well-executed loss prevention program saves money through the recovery of stolen merchandise, which keeps prices low and competitive. Providing a safe and secure environment for people to work and shop, which reduces the frequency of customer liability and employee accidents. And preventing theft through credit fraud, which prevents loss in both money and merchandise and prevents the loss of brand reputation through customer perceptions.

Retailers will be challenged going forward as to how best to deploy resources to combat theft and loss because the reality is, there is no shortage of those individuals who will try to get “something for nothing.”

Thank you for reading.

I’m a Grandparent, military veteran, and college football junkie. My articles have appeared on thegridironnews.com, the Runner Sports, and Death Valley Voice.