Holiday Season For Retailers: Increased Shrink

It’s common knowledge that sales and profits during the year-end holiday shopping season can make or break a retailer’s bottom-line or even their very survival. Consumers have more choices and opportunities than ever as Black Friday starts Thanksgiving Day (is Wednesday far behind?) and 24/7 online purchases–which recently surpassed brick and mortar sales between November and January–are just a click away. Non-retail businesses, from big-ticket producers and sellers to service-based companies also hope to end the year on a high-note.

It’s also common knowledge that shrink (particularly shoplifting and employee theft) dramatically increases during the holidays as “Secret Santas” escape “up the chimney” with money, product, supplies, time, credit card & personal info, intellectual property, and more. While more online sales may off-set in-store shoplifting and employee theft losses, security breaches such as the ones experienced by a few large retailers lately, increase loss prevention costs and hit consumers’ trust and, therefore, their willingness to spend.

The holiday season is supposed to be the most wonderful time of year but, for various reasons, statistics show that retail crime rates increase by 30%. Recently, the National Retail Federation reported that 95% of stores have been victimized by retail crime. It appears the holidays are both the season to give as well as to take.

As one who engaged in both shoplifting and employee theft over a ten year period from 1980-1990, and as a psychotherapist who specializes in treating theft behaviors, I can tell you first and second-hand that people steal for various reasons: greed, opportunity, financial stress, to support a drug habit, for a thrill, entitlement, poor customer service, and personal and social life stressors. The holiday season brings with it various triggers: pressures to buy, the winter blahs, seasonal hiring, stressful family gatherings, absent loved ones, crowded and chaotic stores, increased perceptions about easy opportunities to get away with theft, and spikes in other addictive behaviors from alcohol and drugs to overeating and gambling which lead to poorer self-control and decision-making.

“The holidays can be a stressful time in people’s lives and it causes them to do some things that they may not normally do,” said Bryan, Texas Police Department Public Information Officer Kelley McKethan in a 2012 interview. And this may include literally trampling others to death or fighting over access to stuff. Chances are, you wouldn’t know we’re still coming out of a recession due to continuing holiday sales records and statistics showing that retail theft also escalates during financial down times.

“The economic environment has led to stealing for need-based purposes,” Johnny Custer, director of field operations for Merchant Analytic Solutions, recently told AdWeek. “Most shoplifters simply succumb to temptation,” he said. “But add a sense of desperation because of the economy and holiday pressures, and you have the recipe for theft soup.

Sennco Solutions asserts that most retailers’ preventative security measures are insufficient but the National Retail Security Survey recently collected the following statistics regarding security measures which have helped reduce shoplifting:
*Visible CCTV: 70%
*Hidden CCTV: 46%
*Undercover store detectives: 33%
*Door receipt checkers: 27%
*Ink tags: 27%
*Radio-frequency tags: 20%
*Fitting-room attendants: 15%

In addition to the systems and strategies just listed, I’d add a few more:
*Do criminal background, work history, reference, drug, and credit checks on all hires
*Ensure truly adequate staffing and good customer service
*Mystery shoppers and door greeters (not just receipt checkers)
*Express clear job expectations, rules, and grounds for discipline or termination/prosecution
*Display signs discouraging theft and encouraging honesty, cooperation and kindness
*Require supervisors to authorize discounts, refunds, and exchanges
*Do spot checks–keep things unpredictable
*Lock up/secure smaller or more valuable items and eliminate blind spots in surveillance
*Provide generous coupon discounts and free samples, snacks, entertainment
*Implement an Employee Anonymous Tip Hotline
*Pay and treat employees well and offer them generous employee discounts

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According to University of Florida criminologist Richard Hollinger, Ph.D, who conducted the N.R.S. survey, “the decrease in retail theft indicates retailers are implementing effective loss prevention solutions in order to diligently protect their assets. The holiday season is an important time for retailers to evaluate their security solutions, and the growing adoption and awareness of better loss prevention strategies has continued in the recent trend of reduced retail losses and improved profitability.”

It’s not all good news, as Michael Creedon, Vice President, Retail Sales and Operations, at Tyco Integrated Security recently noted: “While theft is down (in 2013), organized retail crime is on the rise and loss prevention solutions remain very important to help shrinkage continue to decline and operations run more efficiently and effectively.” One can be certain that professional thieves will be out in droves again this holiday season. Tougher federal criminal laws, enforcement and prosecution may be a good start, but these kind of thieves are incorrigible.

The holidays can be the best of times or the worst of times for retailers and other businesses, and they can be the best or worst of times for customers, employees and loss prevention personnel. It’s vital to find balance, pay attention to detail, and manage the unique joyful noise and chaos this time of year brings. $

(Editor’s Note: Terrence Shulman is a Detroit area attorney, therapist, consultant, and author. He is the founder/director of The Shulman Center for Compulsive Theft, Spending and Hoarding. He has authored books on shoplifting, employee theft, shopping addiction, and hoarding disorder. His book “Biting The Hand That Feeds: The Employee Theft Epidemic… New Perspective, New Solutions” (Infinity, 2005) can be previewed at www.bitingthehandthatfeeds.com or www.employeetheftsolutions.com.
His primary website is www.theshulmancenter.com.)

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