Retail theft: a Darwinian Influence

There is a Darwinian influence at play in shop theft perpetrators will steal from retailers with the weakest security, targeting merchandise that can be sold on with ease (such as DVDs and CDs). Retailers have a difficult balance to strike, weighing up the potentially conflicting demands of implementing a robust security deterrent while ensuring the shopping experience is as pleasurable as possible. The most effective strategy to mitigate the risk of shrinkage, of course, is to ensure that retail security measures act as a discreet reassurance for the genuine shopper while representing the risk of apprehension for would-be thieves.

The operational environment for UK retailers is becoming increasingly challenging, with regulators threatening to reduce the penalties for shop theft. The Sentencing Advisory Panel’s decision to recommend that the maximum sentence be a high level community service order is extremely disappointing (‘No Jail just isn’t an option at any time’, Letters To The Editor, SMT, October 2006,). It delivers entirely the wrong message to criminals, for whom any such decision could be perceived as a green light.

If translated into law, it’s almost inevitable that the threat to retailers will increase as the risk-reward ratio favours the miscreant.

Walmart: a practical response

Some commentators have argued that decisions by companies such as Walmart in the United States to no longer prosecute one-time thieves unless they are between the ages of 18 and 65 and steal at least $25 worth of merchandise set a dangerous precedent in the fight against shrinkage. However, the Walmart approach is nothing but a practical response to the issue of cost of provision versus loss.

The major losses in retail are not driven by individuals indulging in petty theft. Rather, they emanate from organised groups of thieves stealing thousands of pounds’ worth of goods on a daily basis. The real danger lies in retailers not working in unison – with other retailers and as part of crime reduction partnerships – to identify and target the major offenders. Retailers may decide not to prosecute all thieves as a result of having limited resources for doing so, but it’s nonetheless vital that deterrents – in the form of possible custodial sentences remain.

Increasingly, criminals will eke out a better return on vouchers or stock sold on eBay than in the local pub, and they’re far less likely to be caught. The criminals are also adept at abusing retailers’ refund policies – established teams steal merchandise and pass the goods on to equally well-established teams who then refund them for cash or gift vouchers.

Quantifiable return on investment

Increased pressures on margins due to fierce competition and the growth of the digital online retail environment have led retailers to demand a quantifiable return on investment for their security spend. Demonstrating a reduction in losses and shrinkage may be accurately calculated. However, it’s difficult to quantify the value of risk mitigation when the threats to a business (terrorism, for example) are rather less well-defined.

One of the key mistakes retailers make when addressing security is an over-reliance on any single loss prevention system. For instance, tagging of goods is an effective method provided it’s properly deployed, with excellent tagging disciplines and staff who respond immediately to activations.

Criminals have their own intelligence networks identifying the security solutions employed by specific retailers. Optimum security will involve human and technological solutions, combining ‘Best of Breed’ CCTV and RFID tagging with visible security officers and covert loss prevention detectives.

Intelligence-led security is an effective strategy for reducing the problem of shrinkage and mitigating retailers’ risks. Increasingly, security solutions providers are introducing advanced analytics and statistical analyses to boost the effectiveness of retail security solutions. This includes comprehensive resource-to-risk computer programs for analysing losses per store and by region, the peak periods for losses and all attempted thefts. In turn, this has led to an increase in the levels of technological skill needed by security operatives to manage security and loss prevention systems.

Britain is now beginning to follow the American example by establishing information databases that will help prevent organised retail crime. Stateside, the National Retail Federation and the Retail Industry Leaders’ Association launched password-protected national crime databases online, allowing retailers to share information on thefts and decide whether or not they have been the victim of organised crime. In the past, merchants had never shared information, thus gangs could hit several stores in one area and always escape detection and/or apprehension.

Pooling resources to beat thieves

Here in the UK, Retailers Against Crime (Scotland) offers an excellent example of companies pooling information in a bid to identify the members of travelling gangs.

Action Against Business Crime, of course, has achieved tremendous results in England (‘Anti-crime partnerships top 100 mark for AABC’, News Update, SMT, October 2006, ). The key is to move forward with these partnerships on a national basis, promoting the constant exchange of information between retailers and agencies in a proactive manner.

Retail security solutions should be designed to meet the specific requirements of the stock, the store layout and its location. Two supermarkets in different locations owned by the same company may appear identical from the outside, but the security considerations could well be materially different. At one store, the loading bay might be contained within a secure perimeter area. In another, it may be easily accessible by members of the public.

An adaptable series of solutions must be available to the security manager such that they can then build on technological innovation while addressing immediate concerns.