High tech security keeps shrinkage down
Shoplifters, employee thieves cost retailers $40.5 billion
Gerri Hunt -- Furniture Today, May 19, 2008
BOCA RATON, Fla. — Retailers are turning to new high-tech security systems to battle theft and shoplifting, which cost U.S. stores an estimated $40.5 billion in 2006.
That figure comes from an annual survey conducted by the University of Florida, with funding from electronic security provider ADT Security Services.
The survey measures retail shrinkage, defined as a combination of employee theft, shoplifting, vendor fraud and administrative error. Employee and internal theft account for the largest portion of retail shrinkage, followed by loses from shoplifting, according to the survey.
Loss rates were lowest in the furniture, jewelry and watches sectors. Books and magazines, accessories, and supermarket and grocery sectors showed an above-average rate of loss, with the highest loss rates in the cards, gifts, floral and novelty items retail sectors.
“The dollar loss to retailers from theft is staggering,” said Jeffrey Bean, vice president, ADT retail sales and operations. “Retailers are looking for more sophisticated and integrated security technology solutions to help limit loses, lower costs and keep prices down.”
Conducted annually since 1991, the lastest survey included responses from 150 corporate retail chains, and indicated that employee theft accounted for $19 billion in 2006 losses, or 47% of the total. Shoplifting accounted for about $13 billion or 32% of the total. The remainder is due to vendor fraud and/or administrative error.
The dollar amount per incident of employee theft is declining, but the dollar amount for shoplifting is rising, which is commonly attributed to an increase in organized retail crime, or ORC. The survey shows the amount of loss due to shoplifting is rapidly approaching the total losses from all personal property crimes, according to the most recent figures from the U.S. Department of Justice.
Many retailers already use security cameras, but now many are switching from video tapes to digital recording, which gives stores much more flexibility in recording and reviewing events. Use of remote cameras is another trend, allowing retailers to record events centrally, viewing them live or at a later time.
Point-of-sale monitoring also is on the increase, allowing retailers to collect and analyze information on every transaction, thereby identifying trends and unusual patterns in each store.
Integrating cameras with loss-prevention hardware and POS software also is growing, allowing retailers to connect video images to events as they happen. For instance, if a cashier has a “no sale” transaction and opens the cash drawer, a camera will record the event. Or, if someone leaves the store with a security tag on a product, a recording of the event will be saved.
“As in last year’s survey, retailers expect to substantially increase the amount of technology they will be using in their stores,” said University of Florida criminologist Richard Hollinger, who has directed the National Retail Security Survey since its inception. “The types of loss prevention systems they indicate they will be adding all involve newer, more sophisticated technology.”
To combat increases in ORC, some retailers are working with centralized data bases to record incidents and study the patterns and behaviors of organized retail criminals. The FBI Organized Retail Crime task force maintains the data base and works with retailers.
“There are a number of new technology tools available to help retailers operate more efficiently, including intelligent cameras and software that can help detect criminal activity,” said ADT’s Bean.
“The more retailers can limit crime and improve their operations, the greater the benefit to shoppers in the form of lower prices and a safer shopping environment, with greater access to more items conveniently displayed in the open,” he added.
