STORES Magazine - April 2011 - (Page 53)

LOSS PREVENTION / RESEARCH LP Programs Begin to Turn Inward With sales and traffic on the rise, loss prevention executives seek new and better internal shrink remedies W BY MICHAEL HARTNETT ith improved retail sales and higher consumer spending levels easing the worst fears produced by the recent recession, many merchants are shifting their LP focus away from external sources of shrink back to those few employees who steal from their employers, according to a survey of 74 retailers by Retail Systems Research (RSR). The one notable exception to this inward shift is a consistent, ongoing concern about organized retail crime (ORC). RSR’s fourth annual report, released in February, shows that the industry’s average shrink rate of 1.6 percent is improving. When asked how their company’s shrink rates compared to that average, 54 percent of respondents said their results were “better” and 37 percent said “about the same.” Just 10 percent described their average shrink rate as “worse” – higher than 1.6 percent. The report’s most significant finding, a shift in LP emphasis from external to internal sources, represents an important cyclical change. Some 71 percent of respondents listed “employee theft of merchandise in stores” as one of their greatest sources of shrink; 62 percent listed “customers stealing merchandise” as a Em p l o y ee t h ef t o f m er c h an d is e i n s t o r es “ Wi t h c o n s u m er s s p en d i n g m o r e i n s t o r es , i t c er t ai n l y s eem s t h at r et ai l er s h av e r et u r n ed t h ei r f o c u s t o r ed u c i n g s h r i n k i n ar eas t h at t h ey c an c o n t r o l .” — Steve Rowen, Retail Systems Research TOP SOURCES OF SHRINK major source. “Employee theft of cash,” meaning voids, post voids and deposits, was described as a major source of shrink by 46 percent of respondents. “This year, with consumers spending more in stores, it certainly seems that retailers have returned their focus to re71% 62% 46% 38% 22% 14% Source: RSR Research, February 2011 Em p l o y ee t h ef t o f c as h (v o i d s , p o s t v o i d s , d ep o s i t s , et c .) Pap er s h r i n k (m i s s ed m ar k d o w n s , in c o r r ec t p u r c h as e o r d er p r i c e, et c .) Or g an i zed c r i m e r in g s Reg i s t er u n d er -r i n g s (s w eet h ear t i n g ) Fr au d u l en t r et u r n s Cu s t o m er s s t eal i n g m er c h an d i s e 29% ducing shrink in areas that they can control,” says Steve Rowen, a managing partner with Miami-based RSR. While the impact of internal vs. external theft fluctuates, reporting in the National Retail Federation’s annual security survey from June 2010 showed employee theft at $14.4 billion, accounting for 43 percent of total losses, compared with $11.7 billion in shoplifting, representing 35 percent of total losses. Key in-store locations where shrink occurs, as obvious as it might be, are “checkout areas,” which more than eight in 10 retailers identified as their primary concern. Some 66 percent listed “high theft” item displays as a key concern, followed by the stock room or back room (50 percent), receiving areas/loading docks (41 percent), logistics/transport (26 percent), distribution centers (21 percent) and fitting rooms (14 percent). Retailers’ choices of hardware, software and internal systems have not changed dramatically in recent years, with 90 percent of respondents using video surveillance equipment, 87 percent using sales audits, 84 percent relying on cash management systems and 78 percent citing returns and void management. Nearly three-quarters (74 percent) of respondents also noted their use of background checks on employee applications. Differences in retailers’ reliance on technology between this year and last are noteworthy: An 8 percent increase in the use of sales audit systems; an 8 percent increase in the use of cash management systems; a 5 percent increase in statistical fraud detection and analytics; STORES / APRIL 2011 53 WWW.STORES.ORG http://WWW.STORES.ORG

Table of Contents for the Digital Edition of STORES Magazine - April 2011

Stores Magazine - April 2011
Editor’s Page
President’s Page
Retail People
Chain of Uncertainty
Digital Couponing
Energy Management
Social Media
Cross-Channel Metrics
Broadband Bonding
Workforce Management
Alternative Payments
Divisional Update
NRF News
Point of View
Retail Industry Calendar
End Cap

STORES Magazine - April 2011