Below are some of the key points of this interview with Mike Keenan. Our discussion is on retail theft.
Background from the National Retail Federation (NRF)‘s 2022 National Retail Security Survey
The COVID-19 pandemic continues to reveal unforeseen impacts across all industries. One rapidly ballooning issue is retail shrink, also known as retail theft, a $95 billion problem for the retail industry.
The study found that the average shrink rate in 2021 was 1.4%, similar to the last five years. But as a percentage of total retail sales in 2021, that shrink represents $94.5 billion in losses, up from $90.8 billion in 2020.
Beyond the loss of goods, these incidents are increasingly alarming. While retail shrink encompasses many types of loss, it is primarily driven by external theft, including theft attributed to organized crime (ORC). In fact, retailers, on average, saw a 26.5% increase in ORC incidents in 2021.
Further, eight in ten retailers surveyed report that the violence and aggression associated with ORC incidents increased in the past year.
Finally, the study concluded that holidays are retailers’ highest sales and loss period.
Questions to Mike Keenan
As we enter the Holiday season, what should retailers focus on from a loss prevention standpoint when it comes to retail theft?
First, I would focus on the safety of both employees and customers. It should always be a retailer’s top priority, but even more so during the Holidays because there are more customers and, due to seasonal hiring, more employees.
An incident of violence to either customers or employees can result in lost sales if customers are afraid to go to that retailer. In addition, the retailer may lose employees if they fear for their safety.
Retailers should review their safety strategies with their employees to know what to do if confronted with an angry customer, a robbery, a smash and grab, or an active shooter.
What should retailers do to protect themselves from retail theft?
The two principal areas are internal retail theft, committed by employees, and external retail theft, committed by customers. The NRF study has identified external theft as a significant factor driving higher retail losses. The media has also brought external theft, specifically ORC, to the forefront.
Grab and runs, smash and grabs, robberies and burglaries are in the news daily. All retailers need to have strategies in place to mitigate external retail theft. In addition to employee training and awareness, technologies such as CCTV (closed circuit television), EAS (emergency alter systems), RFID (radio frequency identification), and locking display cases, safes should be employed to protect products.
Some external theft technologies can work in almost any retailer, while others provide specific protection. Therefore, these technologies must be tailored to fit the retailer’s business model.
What do you recommend concerning internal retail theft?
Employees can cause significant losses to a company. They have the keys to the store, which gives them access to high-value products and cash.
Protection against internal theft starts with solid policies and procedures designed to control loss. To be effective, employees must be aware of the controls and the consequences of not following them.
Good supervision is the best deterrent to internal theft. Employees are deterred if they believe that there is a risk they may be caught.
A supervisor who is consistently monitoring their employees will improve productivity and sales and prevent theft. I interviewed many employees who had stolen from stores and distribution centers during my career. Employees were always very aware of their supervisors.
Many would tell me they would steal only when particular supervisors were working. When asked why, the typical response was, they were not aware of what we were doing.
On the flip side, they said they rarely stole when aware supervisors were on duty. I recommend that retailers create a specific training program for supervisors to deter internal theft. Of course, technology is an integral part of supporting good supervision. For example, giving supervisors access to CCTV in the facility or remotely enables them to extend their leadership beyond what they see physically.