When the going gets tough, the tough go … shoplifting. That’s the consensus of nearly 8,000 grocery retailers who responded to the Food Marketing Institute’s “2009 Supermarket Security and Loss Prevention” survey.
“Historically, an economy in trouble often leads to an increase in theft-related loss” for grocers, concluded researchers at FMI, an Arlington, Va.-based trade association for food retailers and wholesalers. But the good news is that after three years of increases, retailers reported that theft-related losses were down in 2008, which “demonstrates that loss prevention is back on track as the economy rebounds,” FMI researchers say.
Nevertheless, loss due to shoplifting, employee theft, vendor theft, burglary and other fraud accounted for a median of 1.9 percent of supermarkets’ total retail sales in 2008, according to the FMI report.
The bottom line: Whether you have one store or 100, theft can subtract thousands of dollars from your annual profits. In fact, the smaller your store, the more vulnerable you may be because you have fewer resources to put toward security systems. But there are a variety of inexpensive yet effective ways to reduce thefts. Here’s what security experts recommend to combat the four biggest types of store loss: shoplifting, employee theft, vendor fraud and burglary.
Tips to target shoplifters
In 2008, for the first time, shoplifting surpassed employee theft as the number-one supermarket security-related loss, according to the FMI report, although the University of Florida’s “2008 National Retail Security Survey Final Report” still ranks employee theft at the top. According to the Florida report, shoplifting accounted for 34.5 percent of all supermarket and grocery theft in 2008, while the FMI report puts it at 35.2 percent.
The FMI report notes that the average grocery retailer has 13 shoplifting incidents per store per year, with an average loss of $40 per incident. Top items stolen include:
- Beauty products
- Supplements, especially antacids, oral-care products, diet aids
- and analgesics
- Razor blades
- Baby formula
While that mix may seem confusing to retailers (are thieves extra hairy?), it makes sense to security professionals. Beauty products, supplements, meat and liquor tend to be expensive, while razor blades and baby formula are in demand with large, nationwide organized crime rings that sell their booty overseas, in flea markets or on online auction sites like eBay. Think your store is too small to be targeted by professionals? Think again, says Pat Murphy, president of LPT Security Consulting in Houston. “Store size doesn’t matter—in fact, smaller stores may be better targets for these crime rings because they tend to be short-staffed with no security people.”
Murphy and J.R. Roberts, president of J.R. Roberts Security Strategies in Savannah, Ga., recommend the following techniques to thwart shoplifters, either amateur or professional.
- Practice crime prevention through environmental design. “You’re aiming for a clean and well-lighted space, to borrow from Hemmingway,” Roberts says. Start by walking your store and noting any dark corners or hidden spots. These are ideal places for convex mirrors that allow store personnel to monitor the area as they walk by. Then stand at the cash register and check out the view. Can you see down the aisles, or are overstocked shelves blocking your line of sight? Ideally, your shelves shouldn’t be taller than 5 feet, or you should elevate your cash registers so employees have a better view of the aisles, Roberts says.
- Station employees in high-theft areas like your health and beauty section. “The most effective tool in reducing shoplifting is five magic words: ‘May I help you, please?’” Roberts says. “Add the statement: ‘If you need anything, I’ll be right here,’ and that’s a nice way to say to any would-be thief: ‘I’m watching you, pal.’” Consider adding a part-time person during busy hours just to make sure your HBC section is patrolled, he says. That employee doesn’t have to be a salesperson—stockers or cleaning crews can be effective deterrents as well.
- Make eye contact. “The first thing that gives away a shoplifter is their eyes,” Murphy says. “Their head remains still but their eyes constantly shift to see who’s looking at them.”
- Use electronic article-surveillance stickers or put high-end items in locked cases. These are worth the money, Murphy says.
- Use security cameras only if you can monitor them live. Otherwise, they’re just expensive witnesses to a shoplifting, Murphy says.
- Try a few random security pages. An easy way to deter would-be shoplifters is to occasionally announce something like “security scan to section A” over your loudspeaker, Murphy says. But make sure not to specify a department or aisle, or you may offend the lone shopper in your frozen-food section, for instance.
- If your only employee is at the cash register, move high-ticket items close to the cash stand or in the cashier’s line of sight.
- Avoid long lines at the cash register. Surveys show that up to 25 percent of shoplifters say they take an item without paying because the wait in the checkout line is too long.
- Create a “choked exit.” Make sure customers have to go past an employee to get out the door. “It’s also friendly—it gives you a chance to say goodbye to shoppers and thank them for coming,” Roberts says.
- Don’t be a hero. If you see a shoplifter, don’t fight him or give chase. “Shoplifting has become a much more violent crime,” Murphy says. “In 2009, there were 10 shoplifting-related murders in grocery or drug stores in the U.S.” You can try saying: “I want to talk to you about that merchandise; can I have it back?” he says. “Surprisingly, that works the majority of the time.” But the best thing to do, Murphy says, is to “become an excellent witness: Get a physical description of the shoplifter, a vehicle description and a license-plate number.”
Zero in on employee theft
The University of Florida survey found that employee theft accounted for 45.4 percent of all supermarket and grocery losses in 2008, while the FMI survey puts it at 33.1 percent. Whichever number you choose, staff rip-offs are a big deal: FMI reports that supermarkets average six employee-theft incidents per month. What’s more, the Florida survey found that the average dishonest worker logs 10.5 months on the job before getting caught. Experts recommend the following tips to keep employees honest.
- Screen, screen, screen. Do a background check, a criminal conviction check, and verification of past employment and personal references before you hire any worker.
- Make sure you have written policies and procedures addressing employee theft. This can include codes of conduct, bulletin-board notices, shrinkage discussions during orientation, consultations with security experts and online training. Also, make it clear that workers’ lockers are not their own—management has a right to search lockers at any time. These measures not only demonstrate that you won’t tolerate theft, but can also protect you should a dishonest employee sue for wrongful termination.
- Limit part-time staff. According to the Florida survey, the more part-time workers you hire, the more likely you are to have high employee theft because part-timers are “less committed to the overall success of the company” than full-timers. Researchers recommend that no more than half of your sales force be part time.
- Use a point-of-sale exception reporting system. Daily or even weekly monitoring of employees’ cash-register use can easily identify theft warning signs like excessive no-sales or refunds. Don’t have a POS system? “Build a simple spreadsheet recording transactions, no-sales, voids, coupons and refunds for every register log-off,” Murphy suggests. If you identify an employee whose numbers look suspect, “treat it as a training issue,” he says. “Ask why the problem has occurred. If the employee is dishonest, that will shut him down pretty quick.”
- Consider creating anonymous hotlines or tip boxes so staff can report suspect employees.
Vendor fraud Dishonest vendors account for 7.4 percent of store losses, according to the FMI report. Make sure to log in and count every shipment.
Half of the stores that participated in the FMI survey reported at least one burglary in 2008, with a median loss of $613 per incident. Even if you're not in a high-crime area, Murphy says a few simple precautions can reduce your risk of break-ins.
- Ask for police assistance. Many local police departments will send an officer to your store to conduct a free evaluation of your security measures. Don't worry about being an imposition: "Most police are grateful for the interest," Murphy says.
- Keep your windows clear. One reason why convenience stores are nicknamed “stop and robs” is because of windows that are obscured by signs or shelves. Unobstructed windows allow employees to monitor suspicious behavior outside the store.
- Cover your windows with security film. 3M makes a microfilm that attaches to both sides of your windows and is break resistant. An added bonus: It tints windows and improves energy efficiency.
- Vary your cash drops. Regularly change who takes the cash to the bank, when and how. Also consider posting signs along the lines of “Please understand that for your safety and ours, cashier has under $100.” Keep extra cash in a heavy-duty safe until you can take it to the bank.
- Do your burglar-alarm homework. You may not need the most expensive alarm, Murphy says. “Basically, you need a system that functions as a noisemaker, which affects the burglar psychologically—he won’t know if it’s alerting the police or not.”