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July 29, 2015

University Research Highlights Loss Prevention Trends


Loss_prevention

In our visits to NSSF member FFLs, NSSF’s compliance consultant team members are often asked about retail loss prevention trends. In answering that, I often refer to some university research I’ve found invaluable in learning about the subject and in creating remedies.

Led by Dr. Richard Hollinger, Professor, Department of Sociology and Criminology and the National Retail Federation (NRF), the educators and students at University of Florida have been collecting, studying and reporting on shrink losses for more than 20 years. Their findings are released annually in a report called “National Retail Security Survey.”[1]  This report is a benchmark used by retailers of all scale to help understand what other retailers are using to protect people, property and their reputations.

When it comes to utilizing the data in this yearly report, the first thing you as an FFL retailer want to consider is the idea of “shrink.” Very simply, shrink is merchandise that is unaccounted for when an inventory is conducted and compared to your record books.

Click for larger chart

What causes shrink? Many things, including shoplifting, employee dishonesty, vendor fraud, administrative or paperwork errors and more. The numbers in the pie chart presented here represent findings from 100 retailers who reported the sources of their inventory shrinkage losses in 2014. Once you have a grip on shrinkage trends among other retailers and you’ve had a chance to analyze shrinkage in your own store, the next thing want to ask is what methods or tools are other retailers using to mitigate those same types of losses?

Employee Screening

One of the primary focuses of retailers across the country in their efforts to mitigate shrinkage is that of pre-hiring employment screening. The 2015 National Retail Security Survey[1] reports that:

  • 89 percent of the retail study participants are using criminal conviction checks
  • 3 percent use multiple interviews
  • 6 percent verify past employment
  • 3 percent conduct personal reference checks
  • 3% perform drug screening

Again this is trend data, but these large percentages clearly demonstrate the tools today’s retailers find most valuable as front-line defenses against shrinkage. There are other ways to stack the deck in your favor—driving history checks, education verification, credit checks, computer-assisted testing and personality interviewing, mutual protection association (these are databases employers pay to use, wherein they submit names of dishonest employees and can compare submissions made by others), worker’s compensation claims and handwriting analysis—you just have to weigh the monetary and time investment of each one against their potential value.

Post-Hiring Loss Prevention

Loss prevention, of course, doesn’t end with pre-employment screening. It’s important to keep employee-oriented stop-gap shrinkage measures in place after your new hires are on the floor. In order of most to least used, currently trending methods are:

  1. Anonymous telephone hotline
  2. Discussions during new-hire orientation
  3. Providing an expected code of conduct
  4. Bulletin board notices and posters
  5. Training videos
  6. Active-shooter training programs
  7. Internet-based training programs
  8. Anonymous online or email notification tip lines
  9. Newsletters
  10. Honesty incentives such as cash or gift cards
  11. Regular team training meetings
  12. Interactive computer-based training programs purchased from an outside source.
  13. In-store loss prevention committees, announcements and paycheck stuffers.

Beyond the Employee

iStock_000000808514_LargeOf course, loss prevention involves more than just sound hiring practices and ongoing employee training. Drawing again from the University of Florida report, here are the tools retailers are deploying to prevent shrinkage, in order from most to lease used:

  1. Burglar alarms
  2. Digital video recorders
  3. Armored car service
  4. Customer-visible closed circuit television (CCTV)
  5. Point-of-sale data mining tools
  6. Check approval systems
  7. Hidden CCTV
  8. Cables, locks or chains
  9. Remote internet provider (IP) CCTV monitoring
  10. Drop safes (safes bolted to flooring or buried beneath a floor, usually in cement)
  11. Incident management software
  12. Uniformed guards
  13. Security display fixtures (lockable, alarm devices designed for individual merchandise pieces, such as high-end clothing), electronic security tags and other merchandise alarms.
  14. Plain clothes detectives
  15. Door greeters
  16. Shoplifting deterrence signage
  17. Security ink tags (unless removed with the proper tool, the device will explode upon removal and dispense ink over the merchandise and person; usually used with clothing)

By using the data collected and reported by academia, such as the report I’ve used here, you have the ability to see what others in retail are doing and the tools their using to prevent material losses. When I or one of my team members visits an FFL, we advise you spend some time and look at your inventory shrinkage numbers, then compare the source of those losses to what other retailers have reported. What are those same retailers doing to prevent similar losses?

Whether you are talking about burglar alarms, video equipment, employee screening, point-of-sale software or the dozens of other loss-prevention tools, it’s also smart to remember that as, an NSSF member, you have tremendous resources available at nssf.org. The NSSF has partnered with numerous, top-rated companies that offer substantial discounts on many of these services to NSSF’s members. Visit all of NSSF’s affinity partners here for more information.

Bill Napier is a member of NSSF’s retail compliance consultant team. He has more than 30 years experience in retail loss prevention, passionately serving others in leadership roles such as site manager, corporate manager and director. Businesses have included small and growing retail chains as well as a Fortune 1000 company. For more than 18 of those 30 years, Napier has been in the retail outdoor arena with responsibility for ATF compliance and firearms related investigations. He often serves as a guest speaker at NSSF’s SHOT Show, as well as at gatherings of the National Retail Federation (NRF), Retail Industry Leaders Association (RILA), Retail Technology (RETECH), ASIS International and The Loss Prevention Foundation, and he has spent more than 20 years in municipal law enforcement as a uniformed patrol officer, detective and supervisor. Additionally, Napier has been a state-certified law enforcement instructor and he serves as a Hunter Education instructor in Nebraska, on the ASIS Retail Loss Prevention Council, is a member of the Subject Matter Expert Committee and serves on the board of directors for The Loss Prevention Foundation.

 

[1] 2015 NATIONAL RETAIL SECURITY SURVEY NRF & UNIVERSITY OF FLORIDA