Loss Prevention, Risk Management and Theft

Businesses must deal with theft daily. There are two types of product theft,

employee and shoplifter

Shrink is the enemy

Most retailers experience about a 2% shrink rate.Department Stores 2.18% Drug Stores 2.33%Mass Merchants 1.82% Apparel 1.84%Hardware 1.98% Supermarkets .93% ?

Shrink is missing product

After an inventory, shrink turns up on the closing inventory as a negative number. It is theft if it is still not found.

Supermarkets have half the shrink as other retailers

Two reasons:1. People prefer not to steal food, as opposed to

electronics or DVDs.2. Employees are treated better in the

supermarket business compared to other retailers.

Up to 90% of all product theft is from employees

Employees know where the good stuff is and how to get it out of the business.

According to a University of Florida study,

Over 1/3, 35%, of all employees say that they have stolen from their employer.

The most common way in which employees steal is

Discounts to friends and family. “Hey hook me up!”

To control employee theft,

There is five things businesses can do.1. Improve the quality of your employees2. Participation Management3. Awareness programs4. Reward Systems 5. Control employees

Improving employees means

Drug test employees. Employees with drug habits tend to steal.

Background check employees. People who have stolen once might steal again.

Require good interviewing practices.

Have credit checks on employees. People who owe a lot of money tend to steal.

Participation Management is

Is a theory developed by W. Deming a Columbia University Professor. To quote Deming the theory works on the belief that “Dogs don’t bite the hands that feed them.”

In Participation Management, Employees are to “feel” as though they are part of management.

Businesses should:• Pay employees better.• Require that all employees make suggestions regularly.• Give employees great job titles• Employees are to participate in stock purchases and

profit sharing

Awareness Programs

Talk about what would happen if caught stealing. “What would your mother, wife or children think if you were fired for stealing?”

A Reward System pays

Employees for helping management to find thieves. A $100.00 reward is nothing for a business to stop what might be stolen.

A Reward System stops employee theft by:

Suggesting that employees might tell management about what they saw. A Reward System should be done in conjunction with a 1(800) # for anonymous tips

Control Employees

• Employees should come in and out of designated doors

• Employees should be allowed only in specific areas

• Employees should never be given Keys (Only Management should carry keys)

Control Employees

• Employees should not be able to come in on their day off.• Employees should never be given combinations to safes.• Cashiers should have personal sign-on passwords and

tills should be counted in and out after every register change.

Shoplifting

Is a problem, but remember employee theft is a bigger threat.

Most commonly shoplifted items are:

• Razor blades and shaving products.

• Cosmetics, especially face creams and perfumes.

• Wii and other gaming systems.

• Alcohol.

• Meat.

• Satellite navigation, or GPS, systems.

• Brand-name clothes, purses and accessories.

• Infant formula. Some stores lock up powdered formula, which is not only sold on the black market at a higher price but used to cut drugs. Who knew?

•  Watches.

According to a study by the National Retailers Association,

When Shoplifters and Retail Managers were asked, on a scale of 1-10,(10 the most effective) rate the effectiveness of these theft deterrents?

They responded: Retailers Shoplifters

Product EAS tags 2 1

Trained employees 1 2

POS Systems 3 1

Shoplifting Tool effectiveness

They responded: Retailers ShopliftersClosed Circuit TV 5 4Fitting room staff 6 5Mirrors 8 2Security Guards 4 8

In conclusion, Mirrors, according to retailers,

Worked well in catching shoplifters. Shoplifters are not aware of this.

Secondly, that shoplifters are scared of security guards

And that retailers are not realizing this.

According to the FBI

Shoplifters are grouped into five categories:

1.Adolescence, teens and young adults

2.Bums, Vagrants, Alcoholics and Drug Addicts

3. Impulse

4. Professionals

5.Kleptomaniacs

Teens are the most common

Up to 80% of all Shoplifting is done by teens. Shoplifting is a gateway crime into other criminal activity.

Bums

Are probably the easiest to catch. They often smell bad and everyone saw them take what they are stealing.

Impulse

These are probably respectable members of society that just gave into temptation.

Professional

You may never meet a professional shoplifter. They are so good, they rarely get caught.

Kleptomaniacs

Commit 6-8% of shoplifting. It’s a real psychological disease recognized by the APA. If you know a Klepto, you might receive lots of little gifts.

How should a business slow shoplifting?

1. Use devices and personnel, such as Mirrors, CCTV, Security guards and Point of Sale conduits.

2. Use Audible Messages

Let shoplifters know that you may be watching them by announcing “Security to the liquor department” even if Security is not in the store.

3. Train Employees

Teach your people what is typically stolen from the store and how they are stolen. Every business has a different set of circumstances.

4. Create your store layout and design with deterrence in mind

Place the most often stolen items near employees and the management. Lock-up high theft items such as liquor and cigarettes.

Before apprehension of a shoplifter, you must:

1. See them do it.

2. Prove that they did not buy it.

3. Prove that it came from your store.

4. Prove that there was an intent to steal.

Most police departments will

not come out to pick up a shoplifter, unless he/she has left the store. (To prove intent)

Never go out after a shoplifter

Alone!