Category Archives: Commentary

Technology and Loss Prevention: Friend or Foe?

What amazing times we live in these days! I’m blogging this post from 35,000 feet on a Delta flight with wireless internet service. In the past hour, I’ve responded to emails from Japan, UK, Canada, and France that came in overnight, rebooked a flight on Delta.com, sent four text messages to cell phones from my email, and taken care of paying some bills from my online banking account. I remember when a “powerful” personal computer used one 5.25″ floppy drive to run your application (only one at a time) and the other 5.25″ was your “hard drive.”

What impact is technology having on our industry and our efforts to battle fraud and reduce loss? Most of us would have a gut reaction that it is a positive impact. We could support that by citing the use of databases to track cases and share information; POS exception reporting that helps identify fraud at the register; digital CCTV systems that allow us to look-in on stores in real-time or review high risk transactions from the convenience of our computer screen; or the ability to integrate access control, alarm systems, CCTV, and other systems.

However, a contrarian might cite the use of the world-wide web to launch attacks on corporate websites or data; increased ease of sharing information between criminals about targets and security measures; the tremendous vulnerability that PCI non-compliance can have on an organization; the emergence of internet auction sites and their role in disposition of stolen goods; or the potential negative impact on shrinkage when data integrity is accidentally comprised with implementation of new equipment, systems, or technology platforms in our organizations.

What is your view of the impact of technology on our efforts for the good or the bad?

The Sky Is Falling: Why Do We Celebrate Bad News?

Recently, I’ve noticed a trend in our industry that puzzles me.  It seems we believe the best way to get additional attention, funding, and staffing is to celebrate failure or bad news.  A headline in the recent Security Director News, a publication that I think does a great job, reads, “Industry agrees, it’s no surprise shrink is up.”  It details the preliminary NRSS results which show an increase in shrink from 1.44% to 1.52%.  Article after article in the mainstream media highlight “increased shoplifting,” “economy forces employees into theft,” and the like.

It’s not just theft and shrinkage that gets highlighted.  One industry website highlights how many people in our industry have been laid off and how many LP positions have been eliminated.  I’m sure it is not intended to sound gleeful, but that’s how it strikes me.  It reminds me of the way Howard Dean, chair of the Democratic National Committee at the time, got a lot of negative reaction to his almost celebratory attitude when bad news came out of Iraq during the early days of that conflict.

But, wait a minute.  There are lots of success stories happening in our industry despite the economy.  I’ve talked to a number of retail loss prevention executives who have come in with outstanding shrink results – some of them with all-time lows in their company.  Many other organizations have come in with reduced shrink dollars even though the percentage might be up due to 10, 20, or even 30% reductions in comp sales.  What about the NRSS results?  Keep in mind that 1.44% was an all-time low for the survey and the the 2008 figure of 1.52% is near the bottom of the range over the years Dr. Hollinger has been conducting the survey.

As for staffing and personnel issues, there is no doubt there have been reductions and position eliminations and it has had an impact on many of our colleagues.  Yes, some senior executive positions have been “eliminated” but some of those are through consolidations within the industry.  The good news is that there is some activity occurring within the industry, especially at the District and Regional positions and there are some great candidates out there hungry for the opportunity.

I’m not trying to be a Positive Polly here, but I do think we need to consider the face we present to the retail industry.  Do we want to play the part of Chicken Little or do we want to emphasize what we can and do contribute to our individual organizations and the retail industry as whole?

Organized Retail Crime (ORC): A Growing Problem or a Growing Fad?

One of the issues that came up time and time again in our research, was the question of how quickly ORC has grown in the past ten years or so.  Clearly, anyone who has read industry and mainstream media articles, attended trade association conferences, or visited industry message boards has seen a seemingly dramatic increase in ORC during that timeframe.  The recent NRF survey on ORC that was released in May had 73% of respondents saying that ORC incidents had increased for them over the previous 12 months.  Dr. Hollinger also added a new category to his annual NRSS to report a few years ago to start tracking this issue.

We have also heard some counterpoints to the growth of ORC in the past years.  For instance, Charlie points out in a comment on our previous post, that professional shoplifting has always existed in our industry and questions whether we have just given it a new name and expanded the definitions.  In fact, if you read our post on the varying definitions of ORC that are being floated about, it is clear that definitional issues come into play anytime you try to estimate the total impact of ORC or its growth.  In the 2007 NRSS report, responding retailers still only estimated that about 25% of their shoplifting losses were attributable to ORC.  It will be interesting to see how that trends when the final 2008 report is released.

Another consideration is whether part of the “growth” in ORC is attributable to the increased capabilities and attention of retail loss prevention groups.  Incident tracking databases – both internal and industry-wide, improved communications via email, and digital CCTV which can be easily viewed and shared may all contribute to increased visibility of the problem.  Couple the improved tools with an increased focus on the issue and it is easy to see why it would feel like a growing problem.

Where do we come down on the issue?  The simple answer is “We don’t know.”  One must resolve the definitional issues before you can make any pronouncements about scope or trend.  And, we don’t have any baseline data from previous years.  But, regardless of whether it is growing as explosively as it seems or not, ORC is a real issue for many retailers and causes significant losses and we know that is a growing concern for the industry that warrants further research and assessment.

Organized Retail Crime (ORC): A Rose By Any Other Name?

When one reads many of the articles and press releases about ORC, it is easy to feel as if we are talking about one precise type of crime or offense.  However, as we put our research together, one of the difficulties we quickly ran into was the fundamental question of “What is ORC?”  It seems as if it means many different things to different people.  A colleague of mine was at a conference in Boston last year on ORC and three retailers in a row presented on the topic and each one had a different definition.  Here are some of the criteria we heard cited during our interviews and research:

  • Any shoplifting incident over $500
  • Shoplifting for resell
  • Any shoplifting that is not for personal use
  • theft or fraud with the intent to convert to financial gain
  • more than 2 people involved in the theft

Recent articles and discussion have also focused on how cases involving employees get classified.  If an employee gets caught “sweethearting” goods to a friend is that a simple internal theft case or is it ORC?  Articles in trade magazines over the past five years have also suggested that burglaries, robberies, and cargo theft should be included in the ORC bucket.  Should credit card fraud rings be included, as well?  What about individuals who create false bar codes to obtain lower prices?  What about a single individual who goes to the local A&F store, steals four pairs of jeans, keeps two pairs for himself, and sells the other two pairs to a buddy of his for $10 each?  Is that ORC?

Is having a precise definition of ORC necessary?  Maybe not, but there is a need for some consistency especially when legislation is being considered at both state and federal levels.  In our report, we highlight the common elements that seem to be coalescing from the trade associations and legislative efforts.  We would be interested to hear from you about what you think the definition should be and how it is distinguished from other categories of theft.

Organized Retail Crime (ORC) – Different Strokes for Different Folks?

One would certainly be hard-pressed to find a “hotter” topic in the retail loss prevention space over the last five years than organized retail crime (ORC).  Industry articles, conference presentations, legislative lobbying efforts, and increased efforts on law enforcement liason have largely been focused on this issue.  As we began doing our research and meeting with practitioners, it quickly became apparent there were differing views of ORC and its impact.

Based on what we saw first-hand in visiting with certain retailers, ORC is clearly a significant issue for some operations.  As you can probably discern from industry articles, there seems to be more concern on the part of retailers who sell the following types of goods:

  • fashion apparel
  • high end accessories / designer goods / fragrances
  • OTC / HBA
  • baby formula

This does not mean that every retailer who carries these product lines has the same view on the impact of the issue.  Nor does it suggest that there are no retailers who carry other product assortments who see ORC as a significant threat to their business.   Those retailers do exist.

However, it is clear that there are also many retailers who do not see ORC as a significant issue for their operation or, at least, don’t view it as a top priority relative to other shrinkage and theft related elements.  In fact, one leading Vice-President of Loss Prevention who services two distinct retail operations related that ORC was a significant issue for one of his retail divisions, but not at all significant in the other operation because of the distinctly different product mix and market position.

But, while conducting our research, we sensed a bit of contention between the two ends of the spectrum with ORC advocates advancing the thought that retailers who don’t think they have an ORC problem “have their heads in the sand” while those on the other side of the proverbial fence feel as if ORC has received too much attention and is “a game of cops and robbers.”

We hope the white paper and the commentary posts we will be making in the upcoming days on this topic will help everyone look at the issue with some balance and perspective.