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FUTURE OF RETAIL SECURITY By Harold Ritcher

Future of retail security

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Page 1: Future of retail security

FUTURE OF RETAIL SECURITY

By Harold Ritcher

Page 2: Future of retail security

Let’s talk security

Page 3: Future of retail security

Retail Security to Loss Prevention

My 24 years of Security experience has taught me one

fundamental thought and application process…

“SECURITY IS NOT A DEMOCRACY”…

however, protecting a retail corporation’s

assets was a role seen primarily as a

policing one & was judged by the

number of arrests made.

The emphasis increasingly has changed towards the prevention &

deterrence of offending, and much less upon apprehension of

thieves.

Page 4: Future of retail security

2012/2013

National Economic Survey

growth registered by

wholesale & retail sector this

being the second most

important economic driver in

Kenya, beating the

manufacturing, building and

construction, agriculture,

transport and communication

sectors.

7.3%

Page 5: Future of retail security

Sources of Retail Shrinkage - KENYA

Retail crime statistics 2012 by Synovate:

Employee Theft Statistics Percent

Percent of total thefts committed by a manager 37.1 %

Percent of total thefts by an employee who had ideas stolen at work 29 %

Average time office fraud lasts before detected

2 years

Retail employees arrested for workplace theft 1 in 30

Sources of Inventory Shrinkage in Retail Percent

Employee Theft 42.7 %

Shoplifting 35.6 %

Administrative Error 15.4 %

Vendor Fraud 3.7 %

Unknown 3.9 %

Page 6: Future of retail security

Retail Crime

THEFT from business is identified as the number 1 cause of

LOSS in the retail sector to date.

There is no single Government agency leading the area in the

prevention of these losses.

THEFT is a major problem for retailers and it is at times

perceived as a “victimless crime” or a “loss of doing business.”

CRIME losses, and the demand for safety, are increasing with

volume increases.

Overall loss totals are going up because sales revenue

numbers are increasing.

Page 7: Future of retail security

Why theft & why me?

The complex explanations of theft & loss are many, & often not well

understood among ground level practitioners.

Loss problems have always been a function of demand, supply and the

“plumbing” that connect the two.

Greedy demand for basic & luxury items by consumers & commercial buyers

as well as opportunistic, ad-hoc & illicit supply chains are fed by vulnerable

supply chains and stores, manned by a number of ill equipped, corruptible &

incompetent staff.

However, not all is lost, what we now know is helpful for devising a formalised

approach to Crime & Loss Control.

Credible scholarly work has been done on the broad understanding of crime and

it’s causes and the possible resolution/reduction thereof.

Interaction between retail business owners and loss control adjustors are

paramount in wanting to combat crime and reducing losses.

Page 8: Future of retail security

Emerging Organised Syndicates

If you are a shopper in Nairobi and walk into any or most supermarkets, you will

notice something:

Baby milk is stored in a glass cabinet, under lock & key…and the key is in

the custody of one employee!

These security measures by retail outlets are as a result of increased cases of

operational losses occasioned by shoplifting and general theft.

The loss control (shrinkage) industry players fear that it is a case of emerging

organised pilferage ring/s targeting local supermarkets.

Market research company, proved that local retailers are losing more than

1.5% of turnover due to increased cases of shoplifting & theft of stock.

These syndicates are targeting high value products such as electronics,

furniture items, baby food products, cosmetics & general food items.

Page 9: Future of retail security

Global Retail Theft Barometer (GRTB)

200

billion Kenya’s formal retail trade market worth

3

billion Annual losses from pilferage

$119

billion Global shrinkage to internal system errors

The study covered

1187 global retailers

in 43 countries.

Page 10: Future of retail security

Global Retail Theft Barometer (GRTB)

What we previously thought to be small time cases of shoplifting has

unfortunately evolved to become large scale organised crime, leading to high

shrinkage rates on the stockholders.

Conventional in store policing measures are not helping – review of existing

laws , company policies and procedures is a necessity.

1.45%

1.36%

6.6% global shrinkage rate

Page 11: Future of retail security

Simple…

Why do

shoplifters, staff

and syndicates

steal??

because they can!

Page 12: Future of retail security

Focus Points

The lack or control of policies, systems and procedures and or the poor supervision

thereof, are the main contributing factors why staff are able to steal specific company

assets.

It is not necessary for you to try and differentiate between these areas. All 3 focus points

should receive the same amount of attention. It is recommended that you consult or

appoint a specialist in loss prevention & physical risk management that can focus on the

areas mentioned above

Theft Activities

Security Matters

Loss Control Matter

3 Key Areas Of

Focus

Page 13: Future of retail security

How To Deal With Shrinkage

What actions to be considered & what are the focus points?

1. Recruitment process – Sourcing, aptitude tests & integrity

polygraph tests.

2. Employment contract- stipulate in the employment contract that

the company will conduct random polygraph tests.

3. Retail Training – empower staff with the proper knowledge & skills

for efficiency, optimisation and better LP awareness.

4. Key position appointments – are areas of high risk where the

movement of stock is independently monitored (record & report).

5. CCTV – installation of overt/covert cameras at strategic points is

essential.

6. Control Room – cameras are obsolete without the full use of a

dedicated/remote control room and operator.

Page 14: Future of retail security

How To Deal With Shrinkage (continued)

7. Business Intelligence – the placement and infiltration of “Undercover

agents” within the workforce to provide ongoing detailed information

on all forms of irregularities, are ever more eminent.

8. Stock take – regular (monthly, quarterly, bi-yearly) independent stock

takes must be conducted.

9. Loss/systems control officer – is key & is essential to ensure that

controls, systems and policies are implemented and adhered to.

10. Loss prevention/compliance audits - to ensure that all employees,

stores & depots apply themselves consistently and adheres to

company loss prevention policy & procedures.

11. Electronic tagging and RFID – Radio-frequency identification devices

are electronic tags capable of carrying more data that have a wide

range of applications in the retail sector, including loss prevention.

Page 15: Future of retail security

Apprehending thieves, processing them and handing them to

the police(inevitably involving court appearances) is extremely

expensive & often costs more than the merchandise recovered

when a thief is caught.

Loss prevention specialists certainly patrol the stores &

investigate suspicious behaviour, but loss prevention also

includes preparing improved procedures, conformity with

company loss prevention policies, training of staff, analysing

loss to mitigate actual/potential losses caused by error or

procedural failures and help develop new policies for the

changing pattern of retail losses.

How To Deal With Shrinkage (continued)

Page 16: Future of retail security

Summary & Conclusion

1. Loss Prevention (LP) is wide in scope – There is a wide variety of targets for

crime & fraud in retail, so LP has to take a strategic view and work on inhibiting

theft in multiple different areas.

2. Theft = 72% of Shrinkage – so alleviating shoplifting and staff theft should do

most to reduce losses.

3. “Paper” shrinkage/procedural error – accounts for an average of 16.2% of

shrinkage. Poorly designed processes, weak supervision and poor training &

errors are main contributors.

4. Investment in LP – plays a major part on reducing shrinkage.

5. Relationships – LP officer’s role is to work with other parts of the business by

developing joint methods of shrinkage analysis & controls by means of LP

electronic surveillance data & RFID etc.

6. LP partnerships – to be established with other retailers, organisations & law

enforcement as one can learn more about crime movement & trends in a

region and information can be exchanged to combat loss.

Page 17: Future of retail security

Summary & Conclusion

8. Refund Fraud – growing problem of both shoplifting & customer theft

based on abuse of company procedures. LP needs to give higher priority to

developing better procedures.

9. Organised Retail Crime – is a major concern and retailers need to set up

internal teams to assess the scale of the problem & produce appropriate

solutions, work together with other retailers, law enforcement and

organisations like RETRAK

10. Cargo theft & distribution fraud – growing and a costly problem which

involves organised syndicates

11. New recruits – employers must establish that new employees are not a

new source of loss. (Pre-employment polygraph tests to be implemented).

12. LP policy & compliance – should become a standard element of the

business. Regular robust compliance & procedures audits is vital.

Page 18: Future of retail security

Questions?

Harold Ritcher

Hipora Business Solutions

Tel: 0202 514 781 / 0715 346 746

Cell: +254 732 55 1114

Email: [email protected]

Website: www.hiporabsea.com

Thank you!