StrategiestoPreventShopliftingand

EmployeeTheft
byNancyTanker
InpartnershipwiththeNationalRetailFederationandADTSecurity,retaillossexpertDr.RichardHollingerofthe
UniversityofFloridaDepartmentofCriminology,LawandSociety,revealedtheresultsofhislatestannualNational
RetailSecuritySurveyoverthesummer.Retailersinthe2008annualsurveyresultsestimatedalossof$35billionin
salestheprioryearduetothefourmajorsourcesofshrink:vendorfraud,administrativeerrors,shopliftingand
employeetheftthelasttwoaccountingforthevastmajorityoflosses.
Thatsdownfromthepreviousyearssurveyfindings,buttheresnotellingwhatshoplifterswillbeuptothisholiday,
sonowisthetimetotakemeasurestoprotectyourbusiness.

Tips to prevent shoplifting

Lossexpertsagreethatacrucialwaytopreventshopliftingistohavewelltrainedandalertemployeeswhohowtospot
apotentialshoplifter.Employeesneedtowatchforcustomerswho:
Avoid eye contact
Appear nervous
Wander the store without buying
Leave the store and returns repeatedly
Linger in a location that employees have a hard time monitoring
Constantly keep an eye on store employees and other customers.
Inadditiontotrainingyouremployeestospotshoplifters,generalshopliftingpreventiontechniquesinclude:
Staying alert at all times.
Greeting all customers.
Asking lingering customers if they need help.
Knowing where shoplifting is most likely to occur in the location.
Using a log to share suspicions about shoplifters among employees.
Displaying signs that Shoplifters will be prosecuted.
Whenshopliftingissuspected,itscrucialforyouremployeestoknowhowtohandleincidents.TheLosAngelesPolice
Departmentrecommendsthatretailemployees:
Never directly accuse anyone of stealing (call security instead).
Give the person a chance to pay for the item they forgot to pay for by

asking, Are you ready to pay for that? or Can I ring you up?
Never try to physically stop a shoplifter. Call security.
Cooperate fully with center security and the prosecutor if/when the time
comes.

Strategies to reduce employee theft

Somespecialtyretailerssayemployeetheftisabiggerthreattotheirbottomlinethanshoplifting.Expertsagreethatthe
bestdefenseisawatchfuleye.Trythesestrategies:
Stopbyyourstorewithoutwarning.Makeperiodic(yetrandomlytimed)unannouncedvisitstoeachandeveryretail
location.
Spotcheckinventory/drawer.Duringunannouncedvisits,announce:Imjustdoublecheckinginventorynumbers
anddoingaregistercheck.Pickafewproductsandcheckphysicalinventoryagainstinventorysheets/POSinventory
figures.Ifpossible,runacashdrawerreconciliation.Announce:Illbebackagainsoontorunthroughthisagain.
Thisletsemployeesknowmanagementiskeepingitseyeontheball.
Haveaninventorytrackingsystem.UseaPOSsystemthattracksinventoryautomaticallyor,ataminimum,use
paperbasedinventorytrackingsheetstosendasignaltoemployeesthatinventoryisindeedbeingmonitored.
Checktheztape.Checkthoseztapenumbers.Ifyesterdaysztapewasnumber24andtodaysis27,whathappened
to25and26?
Trainemployees.Provideallemployeeswithtrainingontheftprevention,bothshopliftingandemployeetheft.
Discussthewaysthecompanyispreparedtodetecteither.

Encourageanonymoustips.Publishaphonenumberemployeescancalltoleaveananonymousmessageifthey
suspectacoworkerofstealingproductorcash.Ifemployeesareawaretheircoworkersarewatchingandcouldreport
them,theywillbelessinclinedtogetstickyfingers.
Watchforemployeeswithcalculatorsandreceiptbooks.Manyretailerssaythatasuresignofaproblemisan
employeewhohasacalculatornexttothecashdrawer,oraseparatereceiptbooktuckedintoadrawerorpocket.
Checkdeposits.Dontjustcheckifthedepositnumbersmatchthesalesfigures.Alsocheckthatdepositsarebeing
maderoutinelyandwhenexpected(particularlyeasytodothroughonlinebanking).Ifdepositsaretypicallymadeevery
dayandthensuddenlytheyarebeingmadeeveryotherday,findoutwhy.
Checkcashtocreditpurchaseratios.Ifthetypicalpurchaseratiois30percentcashto70percentcredit,andthen
suddenlytheratiois10to90,itstimetoaskafewquestions.
Watchthenosales.Manyretailownersknowthattheleadingindicatoroftheftisasinglepieceofdataonyourx
tape:thenosalenumber.Ifatypicaldaysnosaletallyisfour,buteverytimeaparticularemployeeworksthetally
is10,theremaybeaproblem.
Ofcourse,theresnowaytocompletelyprotectyourselfagainstshopliftingandemployeetheft,butifyoumake
customersandemployeesawarethatyourekeepingacloseeyeonyourbusiness,expertssaythatsthefirstandmost
criticalstepinshrinkingyourshrinkthisholidayseason.

- See more at: http://specialtyretail.com/issue/2008/10/running-a-cart-orkiosk/dealing-with-retailtheft/strategies_to_prevent_shoplifting_and_retail_theft/#sthash.CDrJ8pyD.dpuf

FiveInventoryManagementTechniquesto
AvoidTheftofInventory
ByJagathonJanuary19,2012

Inaperfectworld,therewouldbenoneedtoworryaboutthepossibilityofinventorybeingstolen.Sadly,many
businessesloseaprettybigchunkofchangeeveryyearduetotheft.Itcanbetoughtoknowifinventoryshrinkis
becauseofwaste,breakageortheft.Thefirstthingyoushoulddoismakesureyourstaffarerequiredtorecordall
waste(likeoffcuts,residualsetc.)andbreakage(itemsthatareliterallybrokeninproduction,assemblyorhandling)toa
supervisor.Thesupervisorshouldkeeptrackofwasteandbreakageonadailybasisanddeductitfrominventoryeither
dailyorweekly.Thiscanalsohelpthesupervisorwithremedialtrainingorprocessimprovementsiftherearepatterns
withcertainstafforcertainprocesses.
Afteryouhaveidentifiedwasteandbreakage,therestoftheshrinkislikelyduetotheft.Ifyourelosingmoney
becauseameasurableportionofyourinventoryisbeingstolen,thereareafewinventorymanagementtechniquesyou
canemploy.Rememberdependingonyourbusiness,inventorycandisappeareitherthroughcustomeroremployee
misdeedsHerearefivetechniquestohelpyoureducelossofinventorybytheft:
1.Ifyouhaveaphysicalstore,yourinventorymanagementeffortswillneedtoincludeeffortstopreventshoplifting.If
younoticethatshopliftingisaproblem,youmaywanttoinstallsecuritycamerasandeducateyouremployeesabout
losspreventionandinstoreinventorycontrol.Evenifyoudonthaveaphysicalstoreyoumightwanttousetracking
methodssuchascamerasandtimeclockssothatyouknowwhichemployeesarearoundtheinventoryatalltimes.
2.Makesureyouremployeesknowthatyouarecarefullykeepingtrackofyourinventorywithhighlyefficient
inventorymanagementtechniques.Employeetheftisfarlesslikelyifinventorysystemsarewellrunandorganized.
3.Onlyallowtrainedandtrustedemployeestoeditdatainyourinventorymanagementsoftware.Itseasytochangea
fewnumbersintheinventorysoftwaresonoonerealizesproductsaregone.Manysoftwaresystemsrequireaunique
logonandthereforeupdatestoinventorycanbetrackedbyuser.MakesureemployeesdonotshareuserIDor
passwords.Thiswillgiveyouanabilitytoauditchangesmadetoinventorynumbersifyoueveridentifyaproblem.
4.Onarelatednote,itsagoodideatopasswordprotectyourinventorytrackingsoftwareandanyotherbusiness
softwareyouuse.Youcanthenchoosetoonlygivethepasswordtoemployeeswhodealdirectlywithyourinventory
managementorsupplychainmanagement.AgainmaketheuserIDandpassworduniquetoeachindividualthathas
access.
5.Storeyourinventoryinasecureplace.Thismayseemobvious,butwhereinventoryisstoredissometimes
overlooked.Youshouldtrytosetupsomekindofprotocolwithyouremployeestoensurethatdoorsarealwayslocked
andalarmsarealwaysset.Onlyallowcertainemployees(eitherlinesupervisorsormanagers)tohaveaccesstothe
mostexpensiveinventoryitems.Thatwaytheyareaccountableforthoseitems.Youcanoftenutilizeacage

withinyourwarehouseforreallyimportantstufforuselockedcabinetsinyourretailstorelikeyouseeinjewelryshops
(andonlygivemanagersthekeys!).Smallstepslikethiscansaveyouafortuneinthelongrun.
Ifyouareusingtherightinventorymanagementtechniques,theresnoneedtoworryaboutinventorytheft.Justarm
yourselfwithahighlyorganizedinventorymanagementsystem!

Criminal versus Control

Employee Theft in Retail
In a market where brand recognition, market share and high competition have most
businesses working overtime to reduce cost, there is little room for the losses caused by
internal theft. Industry reports suggest that as much as 43% of all losses are caused by
dishonest employees, totaling $16 billion annually in revenue loss.
Obviously with so much at stake, an honest employee is a key element to business health but is there a magic bullet? How can we tell if an employee is likely to engage in dishonest
behavior?

Why Employees Steal: Criminal Theories

The prevailing explanation of crime is known as the Cultural Deviance Theory, which is a
sociological study of deviant behavior, the recognized violation of cultural norms and the
creation and enforcement of those norms. Unfortunately, this theory of criminality doesn't
always apply in retail environments, and even our own experience with employee theft tells
us that this classic model of crime and criminal behavior does not fit neatly into the
categories describes by the Deviance Theory.
In fact, this explanation creates more questions than answers. Of course all theft is
criminal, but there is an inherent difference between someone who commits armed
robbery and someone who simply steals merchandise. If, as the theory suggests, crime is
the result of 'cultural forces,' then stores in crime-ridden neighborhoods should have higher
losses than those in more affluent. And, if crime is the result of 'strain' to achieve material
goods, theoretically, lower paid employees should steal more than those that are paid
higher wages.
So why are we continually surprised by an otherwise 'nice' employee's involvement in
theft? It's obvious that the Cultural Deviance Theory does not fully answer all of the
questions posed in the retail environment. Even if we accept the contention that "criminals
commit crimes," it does nothing to help us explain the nature of the small number of
employees that actually steal, nor how to identify the differences between the honest and
dishonest employee.
To compensate for these shortcomings, many theorists have placed white collar and retail
crime into a separate category model; however, even this model identifies the catalyst for
behavior as the socialization of the individual and unknown personal motives.

Criminal Versus Control

A new theory has been posed that may offer more insight into the trend of employee theft
in retail environments. In Gottfredson's and Hirschi's "General Theory of Crime," (1990), it
is suggested that the one factor common to all types of crime and deviant behavior are as
a result of low self-control. It is argued that when the components of crime are carefully
reviewed, we observe that it is a lack of control by the individual that results in
engagement, regardless of any social or economic factors.
If their model is valid, then it should be fairly easy to not only explain retail theft in terms of
low self-control, but also to design an environment that minimizes the opportunity for those
losses to occur.
The authors explain that all types of crime have the same universal characteristics:
It provides immediate gratification
It is easy and simple
It provides excitement
There are no long-term benefits
It requires little skill and planning
It results in pain and discomfort for the victim
These characteristics appear appropriate to retail crime. For example, we know that the
majority of employee dishonesty falls into the category of merchandise theft; i.e. pass-offs,
merchandise in personal bags, or brought out with the trash. This is a relatively easy-tocommit crime that does not require much skill or planning. Even in cases of refund and
credit card fraud, it is rare that we see any elaborate or new method of operation.
Additionally, when one compares the long-term benefits of stealing to those of continued
employment, it is clear that employee theft is not a successful endeavor - they are never
going to get rich or retire from their activity.
So how does low self-control fit into our environment? As explained by Gottfredson and
Hirschi, like criminal acts, there are universal characteristics of a person with low selfcontrol, including:
No concern over the rights and privileges of others if they
interfere with the individual's personal satisfaction
Impulsive behavior
Inability to form deep and persistent attachments
Poor judgment and planning in attaining goals
Apparent lack of anxiety or distress over social (group)
maladjustment
Tendency to project blame onto others
Inability to take responsibility for failures
Lack of dependability
Tendency to create drama over trivial matters
A careful review of these characteristics provides greater understanding into retail crime
behaviors. First, it makes sense, according to the "low self-control" theory, that the majority
of employees would be honest. In order to maintain a job an employee needs to have a

fairly stable level of self-control. They need to show up for work, do their job and perform to
the company's acceptable level of standards.
Secondly, in our own experience, we have seen that some of the stores with the lowest
amount of loss and smallest number of employee theft cases are in fact located in the
highest-risk locations.
This concurs with the theories' contention that the characteristics involved in criminal and
deviant behavior are not founded in social causes, but rather individual levels of control.
Additionally, almost all associates are exposed to the same level of opportunity to steal, so
it seems reasonable to conclude that the decision to steal is based on internal factor, rather
than external.

Employee Theft: Deterrence and Prevention

Obviously if we accept this theory, then opportunity still plays a key role in theft. As we
have established that employee theft is relatively an easy method that requires little skill or
planning, we need to ensure that the level of difficulty for success is high.
The best way to accomplish this is through consistent presence in all of your stores, as well
as targeted training and awareness programs. Consistency in presence can be executed
through several venues, such as monthly audits, store security visits, even a mystery
shopping program, all of which communicate to associates at all levels that operations are
being monitored continuously, thereby reducing the opportunity available to steal.
Training and awareness also plays a key function in the reduction of opportunity for theft.
Communicating your policies on operations and suspected/confirmed cases of theft,
whether through training meetings, printed materials in all stores, and so on, acts as an
effective deterrent for most associates with low self-control.
More importantly, this model dictates that the best prevention and deterrence in employee
theft starts with hiring the right employees. It may be appropriate to consider an applicants'
previous demonstration of self-control to ensure a good fit into your business culture.
Through the application and interview process, we can look for clues to levels of
commitment and dependency (multiple job changes, corrective actions for being late, etc.,)
and ask questions that better determine their level of impulsive behavior, ability to accept
responsibility and sense of drama.
Our experience already tells us that most dishonest employees are neither hardened nor
career criminals. We also realize that the vast majority of our employees are honest and
hardworking. However, by understanding the theory of 'low self-control' in relation to your
associates, as well as applying deterrence measures in your policies and procedures,
employee theft can be effectively reduced throughout your organization.

*References
Theft statistics from the 2008 National Retail Security Survey (Dr. Hollinger, University of
Florida)- Dr. Hollinger's survey finds that 90% of employees have never stolen from their
employer.

Will You Fall Victim to Organized Retail Crime?

A Question for the Small to Mid-size Retailer
Organized Retail Crime (ORC) has become one of the more widely discussed topics in the
loss prevention community. In January 2006, President Bush signed H.R.3402, which
among other provisions required the Attorney General and the FBI to create an ORC Task
Force to support the efforts of the retail community in combating the increase in organized
theft.
Two retail support organizations, the National Retail Federation (NRF) and the Retail
Industry Leader's Association (RILA), have developed a national database to allow
retailers and law enforcement to track incidents, analyze possible patterns and help
identify organized rings. The efforts of the NRF, RILA and individual retailers have helped
to raise the level of support and commitment by the legislative and law enforcement
communities. Even with increased support, the individual retailer is still on the front line
and must see their efforts at prevention and protection as the first step in reducing
organized retail crime.

More Than Just Shoplifting

ORC is different than the traditional forms of shoplifting that most retailers encounter.
Although the theft methods are the same, the scale, frequency, and losses of each incident
are much greater. Unlike the thrill seeking teenager or the drug addict supporting a habit,
organized retail crime is a network of well trained individuals whose sole purpose is to
shoplift in large quantities for profit. As the name suggests, these shoplifters are more
organized and tend to work in groups allowing them to blitz a store, distract associates and
provide lookouts to assist in the crime. These ORC "gangs" rely on their experience,
expertise and well planned execution to hit stores quickly, while removing as much
merchandise as possible.
The objective of an ORC network is to re-sell the stolen merchandise through fences,
diverters and even wholesalers. Goods are often shipped overseas, resold to merchants
who believe it is discount priced goods, or placed on black markets. Often the
merchandise makes its way to online auction sites for sale to the general public. The
reach of an ORC "gang" can be global, extending well beyond a single country's border.

Who Are These People?

Organized Retail Crime groups are created with a well established network of roles and
responsibilities. Members come from various ethnic groups, age ranges and gender. In the
United States, groups have been identified from South and Central America, Asia, Russia
and North America. The central theme in ORC is that regardless of size or cultural
difference, the groups are well networked, well trained and well equipped. Ongoing
intelligence indicates that roles and responsibilities extend up and down the organizations
from the actual thieves, to the organizers, fences, diverters and the sales personnel who
get the merchandise back out to the market. While members are well trained and educated

in their roles, knowledge and contact with other members is minimized, either by design or
by nature, making it difficult for law enforcement to break up an entire ORC network.

The Extent of the Problem

The exact financial impact of organized retail crime within the retail community is still
undetermined. We do know that an increased number of retailers have confirmed incidents
of ORC. National news and television has highlighted only a fraction of these occurrences,
but even these show hundreds of thousands of dollars worth of recovered goods. Various
surveys and studies throughout the last five plus years have also shown alarming
individual losses but with little movement to overall industry statistics. At first glance this
contradiction seems to create a problem in any claims of increased ORC activity. Although
difficult to place an industry-wide value on the costs of organized retail crime, the
investigation results and shoplifting apprehension numbers support the contention that a
growing problem exists.
Many larger retailers, who have quantified large ORC losses, have developed specific loss
prevention teams to combat ORC. These task forces travel the country tracking incidents,
following leads and gathering intelligence in an attempt to apprehend ORC groups.
Through a coordination of efforts with local, state and federal law enforcement, some of
these task forces are making a difference within their retail organization.

Will You Become a Victim?

Answering this question is difficult when talking to an individual retail company. The
majority of the known ORC incidents suggest that it is more prevalent in department stores
and large specialty store environments; however this may be more a condition of our focus
than actual occurrence. It seems more likely and prudent to assume that victimization
depends more on retail business factors than just the square footage. The most important
factors to consider include:
Store Location
Merchandise Type
Resell Value (Street Value)
Loss Prevention / Operational Measures
The geographical location of the retail establishment does play a role in it becoming an
ORC target. Although store location alone does not mean that a retailer is susceptible to
increased loss, various risk assessment analysis has proven that certain geographic retail
locations have seen more incidents of crime, including retail crimes, than others.
Merchandise Type and Resale (Street) Value is considered a primary factor in a retailer's
target potential. ORC groups are much attuned to consumer demands and trends, and
target those items with that they can turnover quickly. In addition to demand, thieves must
think in terms of portability. A 55" flat-screen television may have high demand and high
resale value; however it is often difficult for a shoplifter, organized or amateur, to walk out
of the store carrying the television. Merchandise which is more portable to the thief is a
larger target. Items often found to be in demand for ORC operators are trendy apparels,
baby formula, razor blades and small electronics. Any merchandise that can be sold easily

on the street or in various markets (black, overseas, wholesale) would be those of obvious
choice for the ORC criminal.
ORC networks and operators pick the targets and plan their operation well in advance.
Learning the retail target's environment is a part of their regular planning. What do they
look for? Various security measures in place (EAS, CCTV, and guards), employee
awareness and customer service techniques, and operational procedures, such as how
many employees work at given times, how employees service customers, etc. Retailers
with fewer security measures and lack of operational controls, increase their chances of
being viewed as an easy or profitable target by the ORC networks.

How Do I Know That I am a Victim?

Studies suggest that 1 in 11 Americans shoplift. Additionally, since shoplifting and larceny
top the FBI crime report for crime frequency, it is fairly safe to assume that all retailers
experience some degree of external theft. The extent of the incidents and its bottom line
impact is dependent on the quality of loss prevention controls and measures used to deter
shoplifting. Unfortunately, there appears no single or simple answer to whether or not a
retailer is being victimized by an organized group.
Knowing whether or not the loss of merchandise is from ORC or from what can be
classified as "general shoplifting" can be difficult. The easiest or most direct determinant is
to witness or apprehend a unified group who has stolen large quantities of your
merchandise. That along with certain indicators of the perpetrators, such as quantities of
other retailer's merchandise, information on the network, choice of targets, etc. will provide
proof that a network is operating within your retail environment. Based on ORC practices,
one could then assume that a single location is most likely not the only target.
The best indicator is the tracking of inventory losses in specific items or SKU's. The ability
to track losses at the SKU level during inventory periods will help determine if a specific
item is being targeted. More effective and timely is the implementation of cycle counts,
which is a proactive tool that allows you to track potential shortages as they occur, rather
than awaiting less frequent inventory results. The benefit is the ability to identify issues,
add deterrence factors and reactionary processes as quickly as possible, to avoid larger
losses from sustained problems - ORC or otherwise.

The Final Determination

As a small to mid size retailer, the potential for falling victim to ORC may be less than that
of your larger retail partners. The best precaution is a holistic approach to shoplifting in
general. Employee training, education and awareness, strong operational controls,
development and testing of the on-the-floor customer service practices of your employees
and for identified problem locations the allocation of physical security measures to raise
the deterrence level. Organized Retail Crime may be more frequent or our awareness of
the issue may have increased, either way it makes sense to stay informed and think
proactively.

Real Prevention Requires Real Help

Foster a Helping Attitude Among Your Associates

Loss Prevention is as much a philosophy as it is a department. To reach shrink goals, a

company must enlist the help of every associate. Belief that one person or a single
department is solely responsible for loss control is no more valid than the belief that a
company mission statement can ensure great customer service. Real prevention requires
the real help of every associate. Established policy and strong operations may be the
corner stone to loss prevention, but ultimately, culture creates the positive behaviors that
make a difference. Creation of that culture is dependent on understanding why and when
associates provide help.

Is Help on the Way?

No single process can guarantee that associates will help reduce losses. However, we can
draw on the research in social psychology to understand the factors that lead to
assistance, and to design communication that creates the best environment to foster a
"helping attitude."
A determined and methodical approach to build a positive shrink reduction culture may not
have guaranteed results, but will definitely create an environment where results are most
likely to develop. This advice may seem counter intuitive to the business mind that prefers
direct correlation; cause and effect, supply and demand and return on investment. The fact
is, as we tend to focus on the number of apprehensions, audit compliance, and tighter
operational controls, great awareness seldom receives credit for lower shrink results.
However, consider why we became knowledgeable of dishonesty, how we created better
compliance, and why associates actually followed our new policies. The answer: We asked
and they decided to help.

How Many 'Yes's' Do I Need?

The Decision-Making Perspective in social psychology contends that an "individual
decides to offer assistance and then takes action(1)." In this perspective, the individual
actively participates in a process whereby they use social cues and rational evaluations to
determine if they will assist.
In short, the company presents its case and the individual judges the merits of the request
based on the answers to four simple questions:
1. Does someone need help? As simple as this seems it is the most vital
trigger for gaining associate assistance. If the individual does not
perceive a problem then they will not consider providing help.
2. Am I responsible for helping? The associate may understand that a
problem exists, but they only take action if they also believe they are
responsible to help fix that problem.
3. Is helping worthwhile? Every associate functions like a business
enterprise. They conduct a cost-benefit analysis in the formulation of
decisions. If the costs are too high, the benefits too low, or the process
is too time-consuming or unpleasant, then the balance sheet works
against receiving their assistance.

4.

Do I know how to help? Even if we score three "yes's," our efforts are
meaningless and without clear direction. An associate may being
willing and able to assist us, but have no idea what they should do.

Aware-a-size me!
One of the easiest and most direct channels for communicating the desired behavior is
through a clear and concise awareness program. We can think of such programs as
"education," in part because that is the main purpose, but in truth, this is our best shot at
an advertising campaign.
Our customers have finite dollars to spend and we want at least a part of it, so we
advertise, convince, and convey a very clear message - "spend your money here!" Our
associates have finite resources of time and attention, so if we want them to "spend some
of it here" then we also need to advertise, convince, and convey.
Unlike the single purpose of the ad campaign, our awareness message must also elicit the
four "yes's" needed to get the associates to "buy." It should ask for help, communicate an
expectation that they should help, explain the benefits of helping (or the costs of not
helping) and most importantly, give them the tools to help.
The perfect awareness program meets three objectives; interesting, concise, and clear.
Like a good ad campaign, we should have awareness information presented in a format
that is appealing to our potential customer. An attractive presentation not only draws them
in, but it demonstrates that the information is important enough to the organization to
warrant its own place on the wall.
If we expect our associates to read a monthly newsletter, then it is also important that we
keep the information concise. The average person can read 250 words per minute and has
a comprehension rate of about 60%. Newsletters should convey our message in a "one
minute" format by maintaining a word count of 200 to 300 words.
Since that one minute read will achieve an average of 60% comprehension, it is vital that
we make the message as clear as possible. The rule of thumb is to keep it simple - Here is
the issue, here is how you can recognize it, and here is how you can help.
Fancy Posters Are No Substitute for a Good Corrective Action
There is no doubt that punishment can be effective in correcting unwanted behavior.
Receiving help, however, is about influencing a person to do what they otherwise could
avoid. In every study related to influence, it is clear that coercion (the threat of punishment)
is the least effective method because it requires constant surveillance. The associate may
do what we want, but only as long as they are being watched. Coercion leads to "lip
service" and secrecy, neither of which will assist us in our shortage reduction goals. A
good awareness program explains the problem, asks for their help, explains the benefits,
and shows them what to do. In doing so, the associate volunteers their efforts and are
most likely to make their efforts known. This is the ideal situation that will continue,
provided we reward their efforts through recognitionyes, the majority of associates do not
want cash, they want a simple and sincere "thank you."

Is Help on the Way? Part II

Your company can apprehend dishonest associates and customers everyday, you can
have a spreadsheet filled with 100% audit scores, and you can send reams of policy
manuals to your locations, but none of those things alone will help you achieve your
shortage goals without the help of your associates.
We need to investigate, we need to audit, and we need to write and enforce policy, but
ultimately the real power to control loss lies in their hands. The true key to loss prevention
is the associate's willingness not to engage in dishonest activity, their willingness to report
those who do, their desire to help deter shoplifting, and their commitment to follow
procedures that reduce exposure.
Determining if you foster an environment for 'help' is as simple as taking an inventory of
the company's actions and communication:
Is loss prevention an active priority for our entire organization?
Do our actions communicate that priority?
Are we asking associates to help?
Are we showing them how to help?
How did you answer these questions? If the answer to any of these questions is, "No,"
then you may need to re-think how your company perceives loss prevention.

*References
1. Latane & Darlay, 1970, and Scharts, 1977

Loss Prevention 101

The following information is provided to educate those unfamiliar with the concept of loss
prevention across the retail industry. The information below is by no means all-inclusive
and is provided solely as an introduction to loss prevention.
For more detailed information and specific recommendations and support for your loss
prevention needs, contact LP Innovations.
(The term retail can be applied to any industry or segment, including food service or food
retail)

What is Loss Prevention?

Loss Prevention is the concept of establishing policies, procedures and business practice
to prevent the loss of inventory or monies in a retail environment. Developing a program
around this concept will help you to reduce the opportunities that these losses can occur
and more specifically, work to prevent the loss rather than solely be reactive to them after
they occur.

Why does a retailer need to understand loss prevention?

When a retailer experiences a loss, they are losing direct, to the bottom line profitability.
Lost inventory requires replenishment at a cost to the retailer and lost monies cannot be

replaced. The cost of these losses goes direct to the bottom line of a retail balance sheet
causing lost profits. Profits that could have been used for new inventory, new store
openings, employee benefits, increased earnings or improved EBIDTA.

Why do you need a loss prevention function?

Like any other part of your business a loss prevention function or established program
helps make the business better. You have business functions around sales, marketing,
human resources and more - why wouldn't you have a business function around the
protection of inventory and the prevention of losing it?
The size of your loss prevention function, department or program depends on your
business - the number of locations, what you are selling and the potential threats, risks and
concerns facing your business. Having an established function that includes program
elements and resources to establish, implement and monitor loss will make your business
more profitable and less susceptible to certain losses.

How do losses occur?

Most losses occur in three categories; internal theft, external theft and through errors. Here
are some brief descriptions of each category:
Internal (Employee) Theft is the largest contributor to loss for most retailers, regardless of
size or segment. Although some may wonder why employee theft would be the largest
category of loss, hands down, every survey, study and comparison across segments has
shown time and time again that those who steal from a business the most are employees.
Employee theft occurs through many different methods. From simple merchandise theft to
collusion with friends or other store employees, inventory losses by employees can easily
deplete your profits (and the merchandise available for sale to customers). The point of
sale (register) brings with it many other forms of employee theft. Simply removing money
from the till to elaborate "conversion frauds" that include refund, void or discount thefts,
point of sale theft can often cause a "double-dip effect" where you lose money and
inventory simultaneously through a single incident.
External Theft is often caused by shoplifting, break-ins, robberies or other acts by outside
sources. Although it does not cause as much loss overall compared to internal theft,
shoplifting and external theft most certain causes a substantial amount of loss annually to
the retail industry. Controlling external theft requires a commitment to educating your
employees on good customer service, awareness to the signs of a potential loss and how
to best protect the store and inventory against external loss. This requires the
establishment of procedures and training in areas such as; shoplifting prevention, robbery
awareness, safety and how to handle various situations dealing with people. What security
measurements you have in place within your retail location can also greatly assist you in
your efforts against external loss (although not always).
The last major area of caused loss in the retail environment is through Errors. Often
considered paperwork errors, these mistakes can contribute upwards of over 15%-20% of
a retailer's annual loss. Ironically, most of the errors seen in retail are employee-caused,

thereby making a retailer's employee perhaps the highest contributor to the business loss
every year!
Errors can occur anywhere - from checking in shipments, to ringing on the register to
transferring merchandise. These errors can include the inaccurate counting of
merchandise to the improper discounting or accounting of a sale or tender. Simple
mistakes caused over and over again have resulted in thousands of dollars lost to a single
retail establishment.

How do I know if I may have a loss prevention problem?

Losses can be caused by many different reasons and through a variety of methods. How
you know you may have a problem is to look for possible symptoms that the business is
not being profitable. Here are some questions you can ask to see if you may have a loss
prevention problem:
Your cost of goods or food costs are increasing but your sales are
staying the same or decreasing
You notice empty containers, hangers or missing items throughout
your store
Employees are reporting shoplifting issues or concerns
You have been the victim of a robbery over the past year (robbers
often look for easy targets)
You are losing inventory but no one mentions any shoplifting or theft
events (possible employee theft)
One employee reports shoplifting events but nobody else is witness to
these events
Sales are down consistently when a certain employee works
Your cash drawer never balances and has small overages and
shortages
A certain employee has a high number of refunds, voids or no-sales
and not the only employee authorized to handle these transactions
Friends hanging around of asking for a certain employee
These are only a few of the potential indicators that your location may have a loss
prevention problem. To learn more please read our Best Practices and White Papers or
visit our Thought Leadership section.