Month: December 2018

Preventing Retail Theft

Can you predict retail theft?

It would be nice to imagine retailers could gaze into a crystal ball and predict where and when theft or shrink was likely to occur.

According to experts, they can – by using metrics and data that reveal what’s really going on in-store and then projecting the findings to understand what’s likely to happen in the future.

Here’s an insight into some of the most effective ways retailers can gauge the likelihood of where and when theft is likely to happen, and how they can then prevent it becoming a reality.

Metrics and retail shrink

In a recent article in Loss Prevention Magazine, editor Tom Meehan explained how his team once created a shrink prediction model based on three years of data in five key areas.

They looked at:

  • Store sales and shrink – examining sales, customer traffic data, the number of transactions and the value of shrink in dollars.
  • External risks – such as shoplifting cases, proprietary fraud, recoveries, return rate, and general liability claims.
  • Internal risk – including store turnover, cash averages versus shortages, cases of dishonest employees, worker’s compensation claims, and audits.
  • Operations scores – like employee engagement, net promoter scores, order pick numbers, staffing, shipment needs, defect data, and return to vendor scenarios.
  • Vicinity metrics – proximity to metro transits, third party risk scores, distance to major cities, and the region of the US.

What the metrics offered       

Together, these metrics provided an insight into current loss across the business, but also offered an understanding of why that loss was occurring.

Meehan noted pick rates were particularly useful as they not only indicated staff were having trouble finding items because they were misplaced or missing, but it also highlighted operational inefficiency that could be addressed.

Likewise, employee engagement stores provided valuable information about how staff felt in their work environment. Those stores with a higher staff satisfaction scores tended to experience less loss.

Meanwhile, he reflected, the entire experience of delving into the data served as a reminder that shrink was often tied to the customer experience.

Ultimately, it also enabled his team to look in places they hadn’t before to combat retail shrink.

But where do you find all this information?

Big data, big potential

Big data has emerged as a big deal in 2018, with Inside Retail noting “the capture, interpretation and ultimate application of consumer data emerged as a key takeaway from this year’s National Retail Federation Big Show in New York”.

As loss prevention specialist Vitag explains: “The reason for its popularity is that data enables retailers to better understand what their customers seek, how their stores run, what loss they incur, and then ultimately enables them to create the “customer experience” real-world retail rightfully covets in a changing shopping world”.

They note in almost any retail environment, you can capture data through:

The Point of Sale – Where data extends from stock at hand through to individual staff sales, returns, hourly, daily or monthly sales, inventory and more.

Customer insights – like traffic counting that indicates when a store is busy, or heat mapping that shows where people stop within a retail environment.

Staff management – which is drawn from the POS and the sales transactions a staff member makes, but can also encompass new technology like Invue Access Manager, which tracks what staff members access which secure displays using smart keys.

A step further – advanced and predictive analytics

All this data offers an insight into what has happened in a store, but when coupled with predictive analytics and machine learning, the power to foretell what will happen in the future becomes even greater.

The Wall Street Journal explains advanced analytics allows “retailers accomplish more with less, turning data into actionable insights to help reduce or prevent these losses”.

“The greatest benefits lie in identifying the areas of retail loss that historically have gone undetected. Advanced analytics can help companies answer key questions, including what stores to focus on and why, and how to proactively manage those stores as patterns are uncovered.”

They note advanced analytics helps retailers identify:

  • High risk products
  • High risk stores
  • High risk transactions
  • High-risk relationships
  • High-risk labor spending

“By deploying more advanced analytics options, retailers can focus store audit questions on key operational opportunities and high-risk metrics. They can increase visibility into store performance and measure progress over time while also improving the efficiency and effectiveness of field resources.”

 

EAS Tags on the floor

Security tags on the floor? That’s telling you something

Electronic article surveillance is one of the most effective strategies employed by retailers in the war against theft.

It’s efficacy is so highly regarded, the Global Retail Theft Barometer notes 73 per cent of retailers employ EAS in a bid to combat the US$123.4 billion cost of shoplifting that occurs annually.

That said, EAS is only as good as its implementation and application. Its reliability depends on being up-to-date and applying the right tag to the right product in an era when thieves are increasingly savvy and tips on shoplifting are but a Google search away.

If you’re finding security tags on the floor and items have been stolen, it’s telling you something very important about your EAS.

Here’s an insight into why that might be the case and what you should do to swing the security tag battle back into your favor.

Why am I finding tags on the floor?

If you’re a retailer who has gone to the effort of investing in and affixing tags to your merchandise, there are few scenarios more frustrating than realizing shoplifters have circumvented the system.

But the truth is there are some very simple and entirely preventable reasons this may be happening.

Here are just a few…

Insufficient magnet strength

Most security tags rely on magnets as their locking mechanism. That means they close using magnetic force and are reopened using a magnetic detacher. And they come in different strengths ranging from Standard to SuperLock, HyperLock and Multipolar.

Not so long ago, standard strength tags would have sufficed when it came to combating shoplifting, and many retailers still only have standard strength tags in operation.

But now detachers for these can be purchased on the internet, and thieves can also access a host of tips and tricks to circumvent this locking strength.

As a result, Superlock is the recommended minimum strength, with Hyperlock and Multipolar offering additional security.

Wrong tag shape

Just as tags have different strengths, they also come in different shapes and sizes, with some more readily circumnavigated than others.

When it comes to tag shape, the less surface area a would-be thief can use for leverage, the more difficult a tag is to prise open.

That sees clam shell shaped tags less prone to tampering.

Incorrect pin head size

All clothing tags comprise two elements, the pin component (or back) that passes through the garment, and the locking mechanism EAS tag (front) that houses and secures the pin using a magnet or mechanical mechanism.

If you’re finding complete unopened tags on the floor, chances are the shoplifter is pushing the pin head through the garment or cutting a small hole in an item to remove the tag.

A solution to consider in this instance is employing larger pin heads. Larger pin heads are not only harder to illicitly remove but deter any shoplifters from trying as they are more likely to damage the garment, reducing its value or aesthetic appeal.

The right tag for the right item

While apparel is usually secured with clothing tags, other items like fashion accessories require a different approach. Handbags and shoes, for example, might be better protected with cable tags or lanyards that connect into security tags.

If you’re finding cable or lanyard tags on the floor, it might indicate your lanyard or cable is not reinforced and can be easily cut. Lanyards and cables are available with metal reinforcement which makes them much harder to sever and remove the tag from an item.

Extra measures available

In addition to looking at the strength, shape and pinhead size of your security tags, it might also be worth employing some additional deterrents in the form of benefit denial, such as ink tags.

Ink tags deter shoplifters from attempting to remove a security tag illegally as tampering with the tag causes indelible ink to permanently stain the item.

Meanwhile, loss prevention is always a multi-faceted approach. In addition to EAS, it should involve further strategies like staff training, staff screening, camera surveillance, and good store layout with high value items positioned so they are visible to staff.

Retail Crime Blog Post

Organized retail crime at an all-time high

As the retail sector embraces the busiest season of the year, the National Retail Federation is warning of the impact of organized retail crime (ORC), noting this year ORC is at an all-time high, affecting 92 per cent of retailers and costing them $777,877 per $1 billion in sales.

In a report issued in late November, the NRF found nearly three in four US retailers had seen an increase in organized retail crime in the past year, and for over a third of survey participants that increase was “significant”.

Here’s an insight into the latest organized retail crime statistics, and how retailers can combat the growing threat.

The survey

Each year the National Retail Federation conducts a survey of retailers to specifically gauge the impact of organized retail crime, with the report now in its 14th year.

Defined by the NRF as “the large-scale theft of retail merchandise with the intent to resell the merchandise for financial gain”, ORC contributes to the growing impact of shoplifting, which US retailers note is their top source of inventory shrink. In total shoplifting accounts for 35.7% of retail loss.

This year’s survey found ORC losses over the past 12 months had risen seven per cent on last year to equal $777,877 per $1 billion in sales.

“Retailers continue to deal with increasing challenges and complications surrounding organized retail crime,” NRF Vice President of Loss Prevention Bob Moraca said.

“These criminals find new ways to expand their networks and manipulate the retail supply chain every day. The retail industry is fighting this battle by upgrading technology, improving relationships with local law enforcement and taking steps such as tightening return policies, but it is a never-ending battle.”

What’s targeted

Organized Retail Crime typically targets items that can easily be stolen and quickly resold.

The NRF notes that means items range from rom low-cost products like laundry detergent, razors, deodorant, infant formula and blue jeans to high-end goods like designer clothing and handbags, expensive liquor and cellphones.

Stolen goods are recovered anywhere from flea markets and pawnshops to online. Meanwhile, there’s a growing trend that sees thieves return the stolen items without a receipt to exchange them for gift cards.

Retailers attribute the increase in ORC to the easy online sale of stolen goods, gift card fraud, shortage of staff in stores and demand for certain brand name items or specific products.

In addition, a number of states have increased the threshold for a theft to be considered a felony, meaning criminals can steal a larger quantity of goods while keeping the crime a misdemeanor and avoiding the risk of higher penalties that come with the commission of a felony, the NRF notes.

Ways to combat organised theft

The NRF survey found retailers spend an average of 10.2 per cent of their loss prevention budget to combat ORC, with about a quarter devoting over 10 per cent.

In response to the growing threat, almost 60 per cent of retailers are allocating more resources to combat organized retail crime this year.

This includes additional funding for the following:

  • Technology –36.4 per cent of retailers
  • Staff resources – 30.3 per cent of retailers
  • Other budget resources –16.7 per cent of retailers
  • No additional resources – 40.9 per cent of retailers

Many retailers noted they had also employed further strategies such as reassessing their returns and gift card policy to combat return fraud, altering their store layout to move displays away from entry areas, and increased staff training.

Top tips

Combatting organised retail crime should be part of a retailer’s greater strategy to reduce shoplifting, and it is a battle retailers need to consistently invest in and reassess.

Questions retailers and management should be asking themselves include:

  • Does the layout of the store lend itself to stock security (are all areas visible to staff)?
  • Is staff training up to scratch?
  • Is the store’s electronic article surveillance (EAS) system up to par?
  • Are the right security tags being employed on the right products (i.e. Bottle tags for liquor, cable tags for handbags, high-strength tags for valuable apparel).
  • Should security on small-sized items be increased, with multi-function tags or stoplocksfor items like electronic accessories and razors?
  • Should the fitting room be better protected?
  • Should some stock be stored behind the counter?
  • Are EAS tags the right strength? Thieves are becoming savvier, so the recommend minimum strength for magnetic tags is superlock as superlock tags cannot opened by old low-power magnetic detachers. You can learn more about tags and strengths here.
  • Would RFID assist in helping me keep track of inventory across the busy period?

As the NRF notes:

“Organized retail crime is an ongoing challenge for retailers, with losses continuing to mount” and ORC gang members are “are increasingly bold in their tactics”. It is a combustible combination — one that requires loss prevention professionals to stay one step ahead during a time in which budgets are tight and laws are less and less of a deterrent.”