Retailers quietly battle loss prevention

by The City Wire staff ([email protected]) 203 views 

It seems to be the subject that few want to talk about, yet behind the scenes retailers actively pursue means to protect their assets from theft and damage coming from a variety of sources including their own employees.

“The most recent estimates for losses from retailers is approximately $35 billion, of which 44% or $15.4 billion is attributed to internal / employee dishonesty and 36% or $10.9 billion is attributed to external shoplifting and organized retail crime (ORC) theft,” said Garth Gasse, the director of asset protection at Retail Industry Leaders Association (RILA). “These estimates are from the 2011 survey, the most recent available, however, many believe these estimates are on the low side.”

The concepts of loss prevention and asset protection are often interchanged although technically they are different philosophies. Asset protection is more global and speaks more to protecting the company’s overall assets, he said.

RILA has many resources available to member companies including the recent RILA Retail Asset Protection Conference; five functional asset protection committees; training and seminars for leaders; asset protection leaders having the opportunity to develop relationships with others within their industry to discuss ideas and strategies; and the ability to help identify legislative issues that retailers face in regards to asset protection and loss prevention.

Retail officials agree that there are several actions retailers of any size can take to reduce employee theft.

Retailers have many different approaches to protect their businesses from employee dishonesty. Initially, a thorough interview process by multiple supervisors or hiring personnel ensures the ideal candidates are offered employment,” Gasse said. “The next step is the training process and ensuring that loss prevention standards and policies are thoroughly communicated to the employees.

“Having a thorough understanding of the proper procedures and a detailed onboarding process, most of these employees will make good decisions while employed at the respective companies. Many other tools and resources do exist and are utilized by different retailers,” he said. “These include background screening, databases, repetitive procedural training and preventative standard operating procedures.”

Jeff Feldman, a consultant who works with retailers regarding loss prevention and a private investigator for retail theft investigations, said that the incidents of employee theft “wax and wane.”

He agreed that the economy lends itself to increased employee theft, but also said that retailers need to take more steps to protect themselves.

“It starts at the human resources end,” he said, adding that hiring qualified employees who pass background checks and offer solid references is vital.

Another common problem is that retailers fail to upgrade their technology that could help abate theft.
The biggest problem, however, is poorly trained management that does not follow up with the good employees who are hired. If there are potential concerns, many managers are too leery of approaching an employee to discuss the issue.

Feldman agreed that many retailers don’t like to talk about the problems they face with loss prevention.

“People just don’t like to talk about it when they are victimized,” he said. “It’s not something they want to advertise. Plus they don’t like to share those losses with employees because an opportunistic employee might take advantage.”

The City Wire contacted several retailers for this story and all but one declined to comment or did not respond. Wal-Mart Stores, Target and Dillard’s declined to comment and calls were not returned from Harp’s Foods.

Dollar General, which is prominent in the Northwest Arkansas area, did respond, but did not go into specifics.

Although he could not share details about the company’s plans to abate shoplifting and employee theft, spokesman Dan MacDonald agreed that retailers consider loss prevention and asset protection to be a major issue.

“We’re very passionate about keeping our low prices,” MacDonald said. “It’s important to do anything to reduce shoplifting and theft.”

Another growing trend is that retailers are establishing their own internal investigative units and those divisions work closely with law enforcement to investigate, prevent and prosecute retail crime including shoplifting of small items, organized retail crime and employee theft.

Bentonville Police Department Chief Jon Simpson said that Wal-Mart has had its own for many years and even convenience store chains such as E-Z Mart have their own investigative units.

“Wal-Mart has a pretty elaborate system right now,” Simpson said. “We might not know anything about (a situation) until they know they have enough to prosecute then they come to us. A lot is handled internally. Even the smaller chains are doing it more.”