SourceTagging In The Apparel Market - by Robert DiLonardo
Shoplifting:Who? What? Where? and When? - by Robert Dilonardo
LossesSpur Move to High-Tech Surveillance in Stores - ProfessorRichard Hollinger
Shoplifting:a Growing Trend in Teens - by Karen Moller
TheFinancial Impact of Shoplifting - by Robert Dilonardo
Even After Getting Caught?
Reprinted from the National Reporton Shoplifting, 1996c, published by ShopliftersAlternative, a non-profit organization and division ofShoplifters Anonymous, Inc., Jericho, NY, 1-800-848-9595.
Is it need, or is it greed...or isit something entirely different that tempts approximately23 million people to steal from retail stores each year.Except for the drug addicts and hardened professionalswho steal for resale and profit as a business, mostshoplifters are decent people who are otherwise lawabiding citizens. The vast majority of adult offendershave no idea about how or why they become a thief, or whythey continue to shoplift, even after getting caught.
Retailers, police, prosecutors andjudges see thousands of apprehended shoplifters who don'tfit the profile of a typical criminal. For example, theydon't use shoplifting paraphernalia, they don't usedrugs, they carry proper identification, they have noprior criminal record (except perhaps for shoplifting),they don't associate with known criminals, they don'tsteal for resale, they usually have the money to pay forthe item(s) they stole, they frequently have a job and afamily, they steal things they don't really need andoften don't use, they know what they did was wrong andfrequently feel ashamed and remorseful. Their overalllifestyle is not that of a typical thief or criminal.
Retailers, law enforcement and thecourts process these people through the criminal justicesystem, as they should, but with little understanding ofwhy they committed the offense and what kind of treatmentis appropriate to help reduce recidivism. Presented belowis a brief explanation of why these people steal and whatneeds to be done to help reduce the problem.
In simple and concise terms:..... TOGET SOMETHING FOR NOTHING..... But, you must askyourself, why do they want something for nothing?
While we all like to get things forfree and the stores are constantly promoting and placingmerchandise on "SALE" to generate excitementabout getting a bargain, you and I never cross over theline and steal the item, whereas other people do. Why?
The answer is:..... To mostshoplifters, getting something for nothing is like givingthemselves a "gift", which in turn gives them a"lift". Many people feel they need a"lift" just to get through the week.....or eventhe day. A recent study by MasterCard International foundthat shopping was second only to dining out as theprimary way that people reward themselves. Take it onestep further and you can see how "shoplifting"the merchandise could increase the reward.
It is important to understand that"getting something for nothing" alwaysrepresents something more to the shoplifter than thevalue of the merchandise. For different people, it canrepresent any of the following things:
Several studies have found diagnoseddepression to exist in approximately 1/3 of theshoplifters studied. Depression was the most frequentlyfound psychological problem. This helps to explain why somany shoplifters steal from stores on their birthday andaround holiday times.
Any way you look at it, shopliftersperceive shoplifting as a form of self-nourishment or asa way to relieve fear or pain in their life. In truth,shoplifting is self-destructive not self-nourishing, butshoplifters often can't see the paradox.
For almost all non-professionalshoplifters, stealing from stores is basically areflection of a person's ability (or inability) to copewith a multitude of situations in his or her life. It'stheir response to their own personal life situations.While these unhappy life situations may not easily bechanged (or may repeat themselves from time to time)shoplifters must learn how to cope with these situationsin a way which will not be so harmful to themselves orothers. This may not be easy to achieve becauseapproximately 57% of shoplifters caught for the firsttime have already developed a shoplifting habit, or evenan addiction. Many admit that it will be hard for them tostop shoplifting...even after getting caught.
A person's addiction to shoplifting candevelop quickly when the excitement generated from"getting away with it" produces a chemicalreaction (i.e. adrenaline, etc.) resulting in whatshoplifters describe as an incredible "rush" or"high" feeling, which many shoplifters willtell you is the "true reward", rather than themerchandise itself. In addition to feeling good,shoplifters quickly observe that this "high"temporarily eliminates their feelings of anger,frustration, depression or other unhappiness in theirlife. Realizing how easy it is to get that"high" feeling, they are pulled toward doing itagain..."just one more time"...and theiraddiction begins to develop. Even though mostnon-professional shoplifters feel guilty, ashamed orremorseful about what they did, and are fearful ofgetting caught, the pull is too strong for many toresist.
Of course, some people don't seeshoplifting as a functional or psychological problem.They say, "What do you mean that a person can't stopshoplifting? Of course they can, they're justgreedy". The idea that shoplifting is an addiction(except for a few "kleptomaniacs") isridiculous, they say. People who shoplift should go tojail and not be coddled or told they have an addiction.This is like telling them it's ok to steal because theyreally can't help it.
They paradox is that most shoplifterswho have developed a habit or addiction believe theyshould be punished according to the law when caught. Whathabitual offenders often resent, however, is when theyare simply thrown into jail with many hardened careercriminals and are never given any help or support toprevent them from repeating the offense.
Shoplifting among juveniles isremarkably similar to adult shoplifting in many ways.However, the primary issues which are related toshoplifting among youth revolve around family pressure,school pressure and peer pressure.
If you were to ask juveniles caughtshoplifting, "Why did you do it"? The mostfrequent reply would be "I don't know". Likeadults, the reasons teens shoplifted will vary, but mostcommonly it is because they wanted nice things, or feltpressured by friends, or wanted to see if they could getaway with it, or were angry, depressed, confused orbored. Sometimes they are just mad at the world and wantto strike back.
While teens, like adults, usually knowthe difference between right and wrong, when their lifebecomes too stressful they become more vulnerable totemptation, peer pressure and other things that can leadthem to shoplift. This is especially true when they feelunworthy, angry, depressed, unattractive or not accepted.
In summary, shoplifting for millions ofour citizens, is simply another maladaptive way of copingwith stressful life circumstances...ways similar toovereating, drinking, drugs or becoming withdrawn. It isnot an issue of good vs. bad people, rich vs. poorpeople, young vs. old people, or education vs.illiteracy. At any time, or even many times in a personslife, the temptation to "get something fornothing" and reward oneself can easily be present.Although most people believe they could "never"do such a thing, if they do cross over the line, swiftand effective action must be taken by both the retailerand the criminal justice system to help these people getback on track. While it is not appropriate for retailersor the criminal justice system to be sympathetic orforgiving after a shoplifting incident, what isappropriate is for retailers, prosecutors and judges tojointly support punitive sanctions along with communitybased educational rehabilitation programs.
Peter Berlin is the current ExecutiveDirector of Shoplifters Anonymous, Inc. (SA). He is alsoan international consultant on retail theft, a publisherof newsletters to retailers and the criminal justicesystem and a former Director of Retail Security. He islocated at SA headquarters in Jericho, NY.
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Experts predict that over the next tenyears, we should expect to see a sharp rise in crime.This will be brought about as a result of a 23 percentincrease in the teen-age population over the next decade.
While those experts' comments wereprimarily directed towards expectations of dramaticincreases in violent crime and murder, experience teachesus that retailers should also expect to see shopliftingrates rise precipitously. Young people (19 and under) areknown to be responsible for a large percentage of retailtheft, particularly shoplifting.
We believe that the most logicalsolution to this growing problem will be state-of-the-artanti-theft equipment.
The experts predict that violence willbecome even more common-place than it is today.Unfortunately, we should also expect to see more hardcorethieves attempting to steal from retail stores. Keep inmind, we are not talking about the average amateurshoplifter! We are talking about those thieves who carelittle about using force or violence to steal from aretail store. Even today, as our staff travelsnationwide, time after time, we hear of gangs or groups"filtering" into shopping malls and storeswithout being noticed, until they are ready to strike.Once hardcore thieves are inside of a store, intimidationand diversion quickly become favorite weapons to help getsalespeople out of their way so that they can committheir brazen acts of theft.
How are we going to stop the morebrazen thieves?
No easy solution for the retailer!However, whether it be a hardcore, an amateur, or aprofessional shoplifter, all thieves have one thing incommon - they don't like to be observed when committingtheft. And this consistent reaction to not wanting to beidentified may just become the key focal item for themid-90s to turn of the century loss preventionprofessional. Unquestionably, as violence increases,intimidation and diversionary tactics will play evengreater roles in helping thieves to keep salespeople awayfrom a potential theft. And, unless something highlyunusual takes place in the near future, we can also countout receiving any worthwhile help from local policedepartments, as they will have their hands full justattempting to keep up with an environment of rapidlygrowing criminal acts of violence and drugs.
As a result of increased violence,intimidation, and the retailers growing concern for thesafety of their store personnel and customers, we believethat the most logical solution to this growing problemwill be state-of-the-art anti-theft equipment. Thisequipment will replace the salesperson as a store's mosteffective deterrent to shoplifting. Furthermore, vendorsrecognizing the need, will make this equipment, whetherit be EAS/fluid tags, CCTV systems, or alarmed displayracks, much more difficult for a thief to defeat. And,who knows -- with all the high tech research going ontoday -- we just may have some type of futuristicanti-theft equipment in place within the next five to tenyears which will significantly help to reverse thenegative impact shoplifting is now having on the retailindustry. Here's hoping! $
Article found in The Hayes Report,published quarterly by Jack L. Hayes International, 405Prevention Way, Stanfordville, NY, 12581.
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The apparel industry was among thefirst markets for Electronic Article Surveillance (EAS).Since its inception, the EAS industry has protectedapparel with very visible plastic tags, alarming, tags,locks and chains, and even exploding ink tags. As thetechnology in the industry has become more sophisticated,the plastic tags are shrinking. Additionally, thinlabel-like electronic circuits have been designed asadhesive labels, so they can be applied directly ontopackaging at the "source" rather than thedestination.
Why the emphasis on source tagging?It's the cost! Historically, EAS tags and labels havebeen affixed in the back stock room of the retail store.Years ago, when retailers could afford more sales help,the labor costs associated with affixing tags wasconsidered a "soft" cost. Sales associatesaffixed tags in between customers. As retailers have cutlabor hours in the stores, tagging costs have become amore significant burden. For example, suppose a reusableplastic EAS tag costs $0.60. Suppose further thatinventory turnover for apparel is 4 times per year,meaning that the same EAS tag is used 4 times. If itcosts 5 cents in labor to put on the tag the total annuallabor costs required to use that tag is 20 cents! Fasterturning inventory infers more labor costs.
For disposable security labels, theprinciple is the same. It costs between 3 and 5 cents tobuy a label. The label application process is not quiteas time consuming as affixing a plastic tag. Lets assumethat it costs 3 cents to apply it, and only 1 cent todeactivate it at the point-of-sale. The security"burden" for each item is between 7 and 9cents, whether the merchandise retails for $5, $50 or$500. In a supermarket, inventory turns over much fasterthan four times per year. Some items turn over once perweek!
Because source tagging has not reallystarted in the apparel business, virtually all of thesecosts are paid - in either hard cash or loss ofproductivity - by retailers. Experienced source taggers,such as Walgreen's and Home Depot, have displaced somelabel costs and labor costs to suppliers. Someday EAStags will become "smart" and act as a perpetualinventory record keeper as well as a security device. Atthat point, they will be applied to packing or built intomerchandise as it is manufactured. Microwave Users
In the meantime, back in the realworld, apparel retailers have a dilemma. Most of them -especially retailers in the department store andspecialty apparel markets - continue to successfullyemploy an EAS technology (microwave) which is obsoleteand can never be adapted to a label-based smart sourcetagging program. What are these retailers to do?
One of the obvious choices is to retainthe EAS system that is currently in place. If it is amicrowave system, there are several issues which must beaddressed within the next few years.
Planned Obsolescence - Sensormatic hasstated that they would support microwave installationsindefinitely. They continue to manufacture new systems,tags and detachers, but the time will come when theproduct line will be discontinued.
Repair Costs - It is becoming verydifficult and costly to repair old microwave equipment -especially if it is over 7 years old. Some electroniccomponents and custom parts are no longer available. Asthe tags age, they wear out with increasing frequency.
Quality of the deterrent - almosteverybody knows how to defeat the system. Add-ons likeCCTV and ink tags have helped to "prop up" thedeterrent.
Replacement cost - If you have everowned a car with no more payments, you know that it ispainful to re-invest. The same principle holds in the EASbusiness. In many cases, microwave is providing"free" protection because the equipment hasbeen bought, and paid for itself many times over itsuseful life. Can a new system be cost justified?
No chance of source tag - While amicrowave label exists, it's too large and fragile to beconsidered a candidate for source tagging of eitherpackaging or apparel.
On the plus side, there are severalsmall companies who either make new microwave tags, sellused products, or repair and upgrade old systems. As theEAS vendors succeed in converting microwave users intoother technologies, supplies of used microwave productswill be bountiful and cheap. Beware, however, because"there is no right price for the wrongproduct!"
Convert to what?
Source tagging has succeeded inpackaged products and will eventually succeed in apparel,so any decision to replace microwave with another EAStechnology must include provisions for a label that canbe source applied. This effectively limits the currentchoice to one of two technologies - acousto magnetic andRF. In summary, the acousto magnetic label is threedimensional but has a far smaller surface area; it costsmuch more, but works much better. The RF label is muchmore "user friendly" relative to applying anddeactivating; it costs much less, but is lesstechnologically sophisticated.
If the EAS system must be deployed in awide exit (over 12 feet wide), such as in the mallentrance of a department store, acousto magnetictechnology offers a concealed system. At present, the RFmanufacturers do not. In terms of overall cost, RF iscurrently significantly less expensive.
How will apparel be source tagged?
In some ways, the source taggingknowledge transfer will be easier - mainly because of thepositive experience in the packaged goods areas. Themajor EAS vendors have been interacting with themanufacturers of identification products for the appareland textile industries in order to supply an integratedsystem that would allow apparel retailers to"convert" to source tagging. Early in 1994Sensormatic, the world's largest manufacturer of EASequipment, and Paxar Corporation, the world's largestfully integrated manufacturer of labels, tags and apparelidentification products and systems, formed a jointdevelop program in order to design, develop and marketsome combination brand identification/EAS labels whichcould be source applied at the apparel manufacturingplant. In May of this year, Sensormatic and AveryDennison Corporation, a global pressure-sensitive labelmaterials producer, announced a 20 year licensingagreement in which Avery-Dennison will manufacture anddistribute Sensormatic's Ultra*Max labels. CheckpointSystems, Inc. has been developing similar relationshipswith prominent tag and label makers.
Basically, the EAS manufacturers willprovide the security products to the apparelidentification products manufacturers, who will add valueby integrating them with one or more of the products thatthey supply apparel manufacturers. The apparelmanufacturers typically apply these labels to garmentsunder the direction of their retail customers. In thismanner, anti-shoplifting security can be included withouteven modifying the apparel manufacturing process.
The most logical place to source applyEAS labels on apparel is on one of the paper brandidentification or price marking tags affixed toward theend of the manufacturing process. The typical clothingitem contains no fewer than three of these hang tags bythe time it is placed on the rack in the retail store.They are made of paper stock of varying sizes, shapes andthickness, and are typically attached to the clothingnear the end of the manufacturing process via a plasticbarb. Since the standard EAS label already containsadhesive, it can be either hand-applied or machineapplied to the brand identification tag before it isattached to the garment.
Garments would arrive at the retailstore already "tagged" with the dual-purposeproduct. At the point of sale, the security label wouldbe deactivated rather than removed. The consumer wouldremove all of these brand identification tags beforewearing the item, so the security label would be disposedof at that time.
In addition to paper tags, all apparelcontain a few fabric labels which act as either brandidentification or as a care label. Some of these labelsare made of polyester fabric which can be chemicallycoated and then printed upon. Other high quality fabriclabels are woven in intricate designs. These fabriclabels are generally sewn or heat sealed into the garmentat some intermediate point in the manufacturing process,and they typically remain in the garment permanently. Ifan EAS label could be cost effectively sewn into agarment as a brand label, this new combination would makeit even more difficult for a shoplifter to compromise.
When will apparel source tagging becomeavailable?
In theory, apparel source tagging isavailable today. In practice, however, the industry isnot yet ready for "prime time." Four basicelements are required. First, the retailer must utilize asource tagging friendly EAS technology in all locations.Very few apparel retailers, like Target, already do.Second, the tag and label manufacturers, like Paxar andAvery Dennison, must be prepared to supply combinationtags and labels. They are currently available. Third,apparel retailers must attempt to agree on some basicstandards - much like they did with the advent of the barcode. Discussions have begun, but it is doubtful that asingle standard will be set. Fourth, the appropriateleverage must be applied to the apparel manufacturers.After all, just as water flows down hill, the cost andlogistic headaches which retailers are hoping to transfermust be borne by the apparel manufacturers. Few willundertake source tagging willingly. Pressure must beapplied by the large apparel retailers.
This is a very interesting time to beinvolved in the EAS business. Apparel retailers are at asignificant crossroads. Much like the conversion fromold-style electronic cash registers to point-of-salecomputer terminals, a vast quantity of old EAS equipmentwill be converted to new technologies. Originally, EASwas purchased in order to reduce losses due toshoplifting. It is noteworthy that the new EAStechnologies are being procured for more sophisticatedreasons. In addition to the reduction of shoplifting, EAScan help increase sales, speed inventory, lower laborcosts, eliminate logistics bottlenecks in stock rooms,and eventually take the place of perpetual inventoryrecord keeping! All this for less than 5 cents pergarment! Where do I sign?
Biography: Robert L. DiLonardo
Robert L. Dilonardo has been involvedin the retail and industrial loss prevention industry for23 years as a practicing industry professional, a seniorsales and marketing executive representing securityproducts manufacturers, and as a consultant specializingin retail security and inventory control issues. He is awell-known authority on anti-shoplifing equipment, suchas Electronic Article Surveillance (EAS) and benefitdenial devices, and he is an acknowledged expert in thecost justification of security products.
Currently, he is the head of his ownconsulting firm engaged in strategic planning projectsfor large retailers, merchandise manufacturers, andmanufacturers of security equipment. Among his majorretail clients are Kay-Bee Toy Stores and The MayDepartment Stores Company. He has written articles on awide range of topics for publications such as SecurityTechnology & Design Magazine, Security Journal,Retail Business Review, and Sales & MarketingManagement Magazine , among others.
Contact: Robert L. DiLonardo
2882 Sandpiper Place
Clearwater, Florida 34622
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Shoplifting-- Who, What, Where and When
One of the definitions of the wordfeature is "something offered to the public which isadvertised as particularly attractive."
Wouldn't it be nice if a technology wasdeveloped which could identify shoplifters as they entera store instead of as they leave? Then store personnelcould spot the "bad guys" before anymerchandise is stolen. Impossible, you say? Probably.But, a growing number of retailers are apprehendingshoplifters and keeping detailed records on who they are,and on what, where and when they are most likely tosteal. The idea is to establish some basic profile andtrend information that can be used to pinpoint theftoccurrences and either confirm or debunk the notion that"everyone is a potential thief."
According to the National RetailSecurity Survey, U.S. retailers have lost an average ofabout $8 billion per year to dishonest customers. Thisamount would be far higher if it weren't for anti-theftsystems such as EAS and CCTV. Each year, well over 1million shoplifting incidences are reported to the locallaw enforcement. It is estimated that less than half ofall known incidences are reported. Most retail lossprevention experts believe that the number of successfulthefts dwarfs those which are reported!
When a typical shoplifting apprehensionoccurs, the loss prevention agent completes a casedocument which includes some standardized information onthe thief, such as gender, age and race. Additionally,the month, day of the week and hour of the incident arerecorded, as are the type and amount of merchandiserecovered. This basic information can be fed into acomputer and sorted. If the data set is large enough, aninformal "profile" of a typical theftoccurrence can be formulated.
A retail chain can use its own casedata to provide assistance in its loss preventionefforts. Suppose the data collected for a departmentstore suggests that 25% of all cases involves a Caucasianfemale in her twenties, who steals blouses from theJuniors' Department on Fridays between 4 and 6 PM? Itmakes sense to deploy extra security personnel, salesassociates or other anti-theft measures that place atthat time, doesn't it?
Within the past couple of years, alarge national database for shoplifting incidence reportshas been established by Read Hayes, the noted lossprevention consultant. It is the largest knowncollection, containing 171,141 reports from 171 differentretail chains and over 21,000 branch stores. A widevariety of retail vertical markets are included. The mostdata comes from the Groceries/Supermarkets category, with49 companies in the sample. The Drug Stores category isnext, with 16 reporting companies. Following thosesegments, are Home Centers/Hardware stores, with 15reporting companies; Fashion Merchandise, with 13companies; and Department Stores and Discount Stores with12 companies each.
Even though this may be an impressiveamount of raw data, the study is intended to provideguideline information rather than ironclad statisticalfacts. There are a few of "caveats" that shouldbe described. First, since many shoplifters aresuccessful, the data is incomplete. Successfulshoplifting incidences usually cannot be reported indetail. Second, retailers generally schedule lossprevention people for specific hours. It makes sense thatmost apprehensions would occur during the hours whenfloor detectives are scheduled. Who knows how manysuccessful thefts occur at other times? And third, thedata is skewed toward the retail segments that suppliedthe most information. So, the database is imperfect, butas Read Hayes noted "our contention remains thatsome data is better than no data. At least it provides aplace from which to begin."
Normally, the type and style ofmerchandise sold by a retailer "dictates" thegender of most customers. Men are the typical customersin auto parts stores, and women frequent supermarketsmore regularly. The study indicates that 55% ofapprehended shoplifters were men, 44% were women, andabout 1% of the cases supplied no gender. It isnoteworthy that the study also suggests that femalethieves steal more per incident than men do.
A little over 60% of all apprehendedshoplifters were adults (18 years old or over). About 75%of the entire U.S. population are adults. Of the adultthieves, about 52% are between 18 and 30 years old; 45%are between 31 and 65 years old, and 3% are over 65.
The juvenile statistics are veryinteresting. Almost 1/3 of all apprehended shoplifterswere between the ages of 13-17. This age group representsonly about 7% of the U.S. population. Teenagers tend tosteal things that they either can't afford or areprohibited from buying, such as recorded music,cosmetics, stylish apparel, tobacco products and consumerelectronics!
Most shoplifters (about 41%) wererecorded as Caucasian, while African Americans accountedfor about 29%, Hispanics about 44% and Asian Americansabout 1%.
Nationally, the most frequently stolenitems (at least those confiscated from shoplifters) aretobacco products, athletic shoes, brand name apparel,designer jeans and intimate apparel, health & beautyaids, videos & compact discs. It is well documentedthat shoplifters target merchandise either for their ownconsumption or for a quick conversion to cash, so theitems most frequently stolen tend to be expensive and inhigh demand.
The study indicates that the averageamount of theft per incident was $56.67, but thestatistics probably have more relevancy when examined byretail vertical market. For example, the average theft ina drug store was $3.68, but in a consumerelectronics/computer store the number jumped to $412.97!
When viewed on a monthly basis, andcompared to sales by month, shoplifting is a "yeararound" activity. The national statistics showedthat March and December experienced the highest amount ofapprehensions -- about 10% each. In contrast, the monthsof January and September experienced the lowest number ofapprehensions -- about 7% of the total. The other eightmonths were consistently in the 8% range.
Almost 18% of all apprehensions tookplace on Saturday. About 15.4% occurred on Friday, andthe other five days ranged between 13 and 13.6%. Thisindicates that thefts take place anytime, with"amateur hour" occurring on the weekends.
The data on hourly activity is probablyskewed a bit because most stores are not open around theclock. It is no surprise that less than 1% of theapprehensions occurred between midnight and 6 AM. Only 9%occurred between 6 AM and noon. About 55% of the theftapprehensions took place between 2 PM and 8 PM, withabout 32.5% occurring between 2-6 PM.
According to the experts who analyzedthis data, it remains clear that shoplifting continues tobe a year-round activity, perpetrated by almost anyone atany hour of the day and night! The data indicates that,"pound for pound", juveniles (ages 13-17)engage in an alarming amount of thievery compared totheir proportion of the general population. In 1997,there will be over 15 million juveniles in high school inthe U.S. This is a record number, and it is projected tobe about as large for the next 10 years.
Our society is data-driven. Studies ofthis nature can be instrumental in both isolatingshoplifting problems and calling attention to the needfor more effective solutions -- sociological as well astechnological. Judging by these statistics, we all havework to do before the shoplifting problem is solved!
Contact: Robert L. DiLonardo
2882 Sandpiper Place
Clearwater, Florida 34622
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LossesSpur Move to High-Tech Surveillance in Stores
The nation's retailers lost anestimated $25.7 billion last year from employee theft,shoplifting, administrative error and vendor fraud,according to the seventh annual National Retail SecuritySurvey. The survey of retail security executives byresearchers at the University of Florida was releasedWednesday.
The losses, known as inventoryshrinkage, were 1.77 percent of total 1996 retail sales,down slightly from the year before, according to thesurvey. Employee theft made up 41.4 percent of the totallosses, shoplifting 35.1 percent, administrative error17.6 percent and vendor fraud 5.9 percent.
With more than three quarters of thelosses coming from employee theft and shoplifting, surveyrespondents said high-tech electronics systems to monitorboth employees and merchandise on the sale floor weremore likely to see increased usage in the coming year.
"The survey respondents tended toshow greatest interest in the newer, more technologicallyadvanced alternatives," said Dr. Richard C.Hollinger, director of the university' Security ResearchProject which conducts the survey.
"The national retail market isextremely competitive and retailers appear to be lookingto sophisticated electronic systems to reduce losses andincrease profit margins," Hollinger added. Closedcircuit television at the point-of-sale and electronicsecurity tags embedded in products and packaging by themanufacturer were among the "hottest newitems," the survey said.
"More retailers and vendors arestarting to have security labels installed at themanufacturer by embedding then in the productsitself," said Joe Ryan, vice president of GlobalSource Tagging for Sensormatic Electronics Corp.,"This process called source tagging is one of thefastest growing area of retail security."
Although observation mirrors, cables,locks and chains, and armed security guards were stillamong the most common deterrent strategies, they werealso among those most likely to see decreased usage inthe next year, the survey said.
One of the most dramatic findings ofthe survey was a 42 percent increase in the number ofempty packages found on sales shelves, from 893.6 to1,270 empty boxes per $100 million sales. For example, alarge discounter with $34 billion in annual sales couldhave as many as 431,800 empty packages found in itsstores in a year's time.
Ryan of Sensormatic said the increasein empty boxes was evidence of shoplifters' increasingefforts to defeat anti-shoplifting labels applied to theoutside of packages that sound alarms if removed from thestore without being deactivated. This has been thedriving force behind Sensormatic's program to integratetags in merchandise.
Among the survey highlights:
--Some of the highest losses werereported for books, toys and hobbies while some of thelowest were reported for liquor, beer and wine.
--Above average losses were reported inwomen's apparel while below average losses were reportedin men's apparel.
--Retailers reported apprehending anaverage of 256 shoplifters per $100 million in sales, butonly 32.8 employee theft apprehensions per $100 million.
--Retailers lost an average of $172.28per shoplifting incident compared to $919.29 per employeetheft incident.
--Retailers were nearly nine times morelikely to seek prosecution of shoplifters, 109prosecutions per $100 million in sales, than cases ofemployee theft, 12.5 prosecutions per $100 million.
The survey was based on 227 anonymousresponses to a questionnaire return by a cross section ofretailers representing 24 different marketing categories.The typical respondents was typical of the size anddistribution of retailers in the U.S.
Retail market segments reportingshrinkage percentages above the average of 1.77 percentwere Books and Magazines (4.12 percent); Cards, and Giftsand Novelties (2.69 percent); Cameras (2.05 percent);Shoes (2.02 percent); Women's Apparel (1.96 percent).
Market segments reporting below averageshrinkage were Men's Apparel (1.70 percent); HouseholdFurnishings (1.69 percent); Full-line Department Stores(1.60 percent); Discount Stores (1.58 percent); SportingGoods (1.55 percent); Convenience Stores (1.52 percent );Supermarket and Grocery (1.47 percent) and Liquor, Wineand Beer (1.28 percent).
The University of Florida's SecurityResearch Project mission is to provide a reliable andunbiased source on research, statistics and informationtopics related to private security and retail lossprevention.
Sensormatic provided principalfinancial support for the survey project in the form ofan unrestricted research grant. Sensormatic is the worldleader in providing electronic security systems toretail, commercial and industrial markets.
Copies of the full NRSS study may beobtained for a nominal charge by contacting ProfessorRichard Hollinger, Security Research Project, Departmentof Sociology, University of Florida, 3219 TurlingtonHall, Gainesville, FL 32611-7330. Orders can also be madethrough the UF Web site:
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Shopliftinga Growing Trend in Teens
By Kendra Moller
A young man, age 16, walks into adepartment store with a group of friends. One of thensees a pair of jeans that he's dying to have. However, hecannot afford them. The friends try to convenience theboy to take the jeans.
"No one ever gets caught. Come on,it's easy," a friend says.
The young man picks them up along withanother pair of jeans and a shirt and goes into thedressing room. He casually slips the jeans into a bag andwalks out, putting the pair of jeans and shirt back. Thegroup starts to walk out of the store, but just when hethought he had made it out of the store safe, he felt aperson's hand on his shoulder.
"Please come with me," theman says. He is led into an office while the group offriends walks away from the store in a hurry. He sitsdown, and the man calls the police and his parents.
Later on, after the ticket was issuedand the store policy was read, he ended up banned fromthe store, fined, and referred to the Youth Aid Bureau.The tee thought to himself, "Was this worthit?"
Although this story involved a teenageboy, shoplifter are not all boys. In fact, mostshoplifters are high school age white females The age andsex of shoplifters varies from store to store. Sears has50 percent males and 50 percent female shoplifters. AtDillard's, 85 to 90 percent of shoplifters are under theage of 18.
There are many reasons people shoplift,including pressure from friends, envy, and even belief onhow it's done.
"It's exaggerated how easy it isto steal," Dan Goodwin, Loss Prevention Manager atJC Penny commented.
"Kids come in groups... then as aprank they're dared to do it [shoplift]," KeithSheets, Store Manager of Dillard's, said. "Eventhough they think it's a joke, we take itseriously."
Teenagers aren't always theshoplifters. Many employees within a store shoplift.
"Here [JC Penny], internalshoplifting, which involves associates, is a largerproblem," Goodwin said.
On average at JC Penny, 10 to 15shoplifters are caught per month, while at Sears, one iscaught every three days. Dillard's reports catching themdaily.
Just like the ages of shoplifter, thetype of merchandise stolen also varies from store tostore.
"For young men, Nike, Adidas, andJenco Jeans are the most popular." Goodwin said."Something from every department," said TerryPell, Asset Protection Manager at Sears.
"Things are stolen all over, butdenim is the most desired," Sheets said.
The consequences are what usually hurtsthe shoplifter the most. "We prosecute to thefullest extent. Then they're ticketed and possibly takento court, " Sheets stated. "Cited if theyreturn."
Most stores will ban the shoplifterfrom the store and cite them for trespassing if theyreturn, while some will just ask the person to leave.
Increased security is one of themeasures stores are taking to reduce shoplifting. Everystore has their own ideas. Sheets suggested, "I'dlike to see peers pressure kids to stopshoplifting."
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TheFinancial Impact of Shoplifting
Shoplifting results in a complex seriesof financial losses for the retailer. Some of theselosses are self-evident, but others are quite subtle.They can best be illustrated through the use of anexample that "tracks" an item from the time itis originally ordered, to the time when it should bere-ordered.
Suppose that a branch store of a largemen's clothing chain has ordered 12 navy blue men's sportcoats in a normal size range. The wholesale cost of eachcoat is $100, and the selling price is expected to be$150. Freight charges from the manufacturer amount to $10for each coat. The shipment arrives at the distributioncenter and is dispersed to the store, where the coats areplaced on the sales floor. If 4 coats in the most commonsizes are stolen, then the most obvious financial loss isthe cost of the items ($100 each) and the freight charges($10 each). Also lost are any costs incurred to processthem, move them from the distribution center to the salesfloor, or otherwise prepare them for sale. These costsare difficult to assign precisely to the coats, and areoften termed "soft" costs. The wholesale costand freight cost are termed "hard" costs.
Since the coats were stolen instead ofsold, the opportunity to sell them at a profit is lost aswell. If all 12 coats had been sold, maximum sales volumewould have been $1,800 (12 times $150). Since only 8coats remain, maximum volume is $1,200. In order to makeup the sales shortfall, another procurement is required,which means that at least 16 coats will have to bepurchased in order to generate the sales volume of theoriginal 12. Obviously, the additional procurement meansanother round of freight charges and other"soft" costs. If the coats cannot be replaced,or if the remaining coats must be marked down, maximumsales volume potential is still lower, while the costs togenerate the sales are higher than normal.
In summary, the shoplifting of thecoats results in the following losses:
* a revenue shortfall
* an inventory shortage
* loss of the cash invested in themerchandise
* freight charges
* productivity on the part of thepeople processing the shipments
* a portion of any other fixed orvariable costs incurred to sell the coats.
To relate this to the bottom line,suppose our men's clothing chain operates at a 5% netprofit after taxes. One hundred additional coats wouldhave to be procured, processed and sold to generate theprofit required to replace the four coats that wereoriginally shoplifted!
Capital budgeting helps in theequipment selection process.
More and more retail loss preventionexecutives are using financial analysis techniques todetermine how best to attack shortage problems --like theshoplifting example above. One of Sensormatic'scustomers, Walter E. Palmer, director of loss preventionfor Kids 'R Us, is a strong believer in using financialanalysis to help him determine where and how to spend hisprecious loss prevention capital. Palmer believes that athorough understanding of the capital budgeting processhelps loss prevention executives make correct decisionsabout what to buy? How much to buy? and Where to deploythe loss prevention assets?
Palmer uses information about storeconfigurations, staffing levels, inventory shortage, andstore profit and loss statements to decide where todeploy anti-theft measures, and to calculate what theexpected financial outcome will be. For Toys 'R Us, andmay other retailers, the use of Sensormatic's Inktags iscurrently the most cost effective method of combatingshoplifting.
Contact: Robert L. DiLonardo
2882 Sandpiper Place
Clearwater, Florida 34622
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Tobacco products (cigarettes inparticular), athletic shoes, and logo and brand-nameapparel rank as the most frequently stole items acrossall retail categories, according to a recent shopliftingsurvey. The 1997-1998 Retail theft Trends Report, whichanalyzed some 166,200 shoplifting incidents, found thatcustomers theft costs retailers approximately $9 billionannually, with an average amount pr incident of $58.43.
"Desirable merchandise thatappears vulnerable, with low-risk and quick-exitopportunities, drives retail loss numbers. Retailersshould identify the most frequently targeted theft items(see chart) so better protection efforts can beimplemented," said Read Hayes, president, LossPrevention Specialists, Winter Park, Fla.
The survey fount that while allcategories of trade are vulnerable to theft, some aremore at risk than others. Among the most vulnerable aremusic retailers, where the high desirability and easilyconcealable compact discs makes for high theft problems.
Among the survey's other highlights:
Juveniles accounted for adisproportionate percentage (over one third) ofapprehended shoplifters compared to populationdemographics.
"It's obvious that juvenileshoplifters constitute a growing problem forretailers," Hayes adds.
A relatively high percentage ofshoplifting involved collusion between employees andcustomers.
Comparisons of apprehensions bymonth affirm that shoplifting is clearly a year-roundactivity.
"We continue to see a flatteningout of incidents by day of week and by month of year.supporting the fact that shoplifting is an all-day,all-year problem," Hayes says.
More males (55%) than femaleswere reported as shoplifters.
Retailers who useelectronic-article-surveillance (EAS) devices and closedcircuit televisions systems had the highest apprehensionrate.
The survey findings come at a time whenmany retailers are re-examining their securitystrategies. Wary of costly legal battles (and even morecostly judgments) over wrongful arrests or injuriesduring confrontations with shoplifters, operators aremoving to limit their liability. Increasingly, theemphasis seems to be on deterrence as opposed toapprehension.
"There is a trend todeterrence," says Hayes. "Retailers are notonly using more visible ink tags and the like, but arealso doing more things with the layout of stores and thezoning of employees to deter shoplifting."
The emphasis on deterrence would see torun counter to another major trend in security: sourcetagging whereby the tags are concealed in products at thepoint of manufacturing by the supplier.
"I think there is a conflict andthat it will b an issue going forward," Hayes says."I believe in source tagging. But we need tofigure out how it can be utilized without losing thedeterrent value of the tags."
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MOST FREQUENTLY SHOPLIFTEDITEMS BY STORE TYPE
|TYPE OF RETAILER||MERCHANDISE|
|Auto parts||Auto accessories|
|Consumer electronics/computers||Compact discs|
|Department stores||Clothing: shirts|
|Discount stores||Clothing, undergarments, compactdiscs|
|Drug stores/pharmacies||Cigarettes, batteries,over-the-counter remedies|
|General merchandise stores||Earrings|
|Grocery stores/supermarkets||Over-the-counter remedies,health and beauty aids, cigarettes|
|Home centers/hardware stores||Assorted hand tools|
|Specialty stores||Bed sheets|
|Specialty apparel stores||Assorted clothes, shoes|
|Sporting goods||Nike shoes|
|Theme parks||Key chains, jewelry|
|Video stores||Video games|
SOURCE: 1997 RetailTheft Trends Report
Source :www.shopliftersalternative.orgTo learn more, you may contact us by telephone (203.264.6802) or via email.