Category Archives: Theory/Research

Annual Retail Theft Survey

Twenty-two major retailers lost more than $6 billion to shoplifters and dishonest employees in 2008, according to the 21st Annual Retail Theft Survey conducted by Jack L. Hayes International, a loss-prevention consulting firm.

On the upside, a record 904,226 thieves were apprehended, up 7.26 percent from 2007. Of them, 832,106 were shoplifters and 72,120 were dishonest employees, the survey says.

That breaks down to one in every 30 employees being apprehended for theft from their employer in 2008, based on more 2.1 million employees.

The survey found that more than $182 million was recovered, up 21.64 percent from the previous year. More than $113 million was recovered from shoplifters, while $69.8 million was recovered from employees.

“With the downturn in the economy, we have seen an increase in theft, which is having a detrimental impact on retailers’ bottom-line profits,” says Mark Doyle, president of Jack L. Hayes International. “These theft losses drive consumer prices higher and can force unprofitable stores to close.”

The average theft in 2008 was $202.28, up from $178.37 a year earlier.

The 22 retail companies participating in the survey had 19,151 stores and more than $570 billion in retail sales as of 2008.

Training & Awareness: Do Your Employees Know What to Do?

At this year’s RILA conference in Orlando, I presented a general session where we talked about the various performance “levers” that exist and how they can be used more effectively. There is a tendency for managers to push on the same one or two levers over and over again, even if they are not the ones that will have the most impact on performance.

One of the first levers we discussed was task clarification. This simply means, “Do our employees know what we want them to do?” Now, this may seem like a silly question to you. You may be saying to yourself, “Well, of course they know what we want them to do!” But, I suspect we have all used task clarification on a regular basis.

For instance, have you ever been in a meeting where you have been discussing a performance issue and the resolution of the meeting was that someone said, “We’ll send out a memo on this!” That, my friends, is task clarification.

Task clarification can be very effective if the problem is, in fact, that employees are unclear on what you want them to do or don’t understand your performance expectations. However, one of the points in my presentation is that task clarification will have little impact if your employees already know what you want them to do but don’t have the incentives, the proper tools or systems, or the capacity to complete the task.

In this post, I’d like to explore task clarification a little more closely and make sure that we use it in a way that is effective in changing the behavior of our employees. Isn’t that the goal of our training and awareness programs?

Effective task clarification has the following characteristics:

 It is specific to the task at-hand.
 It communicates to employees what you want them to actually do
 It identifies what model performance looks like
 It clearly communicates what is not acceptable

Let’s look at some of the training and awareness messages that companies use in terms of these four characteristics. For example, probably all of us have evangelized on the phrase, “The best deterrent to shoplifting is customer service.” This mantra has been communicated in training meetings, on posters, in videos, and on conference calls. Like many corporate mission statements, there is nothing there that you can argue with, but is it an effective training message?

Assuming an hourly associate gets that message, does it tell them what you want them to do? If they see a customer who looks “suspicious,” what are they supposed to do? If they see a woman stick a blouse in her purse, what are they supposed to do? If a customer comes out of the fitting room with fewer items than they entered with, what are they supposed to do?

And, just as importantly, especially in our business, what are they not supposed to do?

Here’s another example…many organizations have spent significant effort and time to get their employees to know their most recent shrink result and the goal for the current inventory period. Executives from the corporate office visit the store and ask employees, “Do you know your most recent inventory shrinkage number?” If the employee responds correctly, the executives are pleased, they tell the Store Manager and DLPM, “Great job!” and look forward to great results from the upcoming physical inventory.

But, is it possible that all those employees have committed the number to memory but have no idea what they are supposed to do to make the number lower? Is it possible that, left to their own, well-intentioned efforts, they might actually do things that you don’t want them to do?

When designing and implementing your training & awareness programs, focus on the behavior outcomes you want from your employees and make sure your communication has the four characteristics listed above and you stand a good chance to improving results.

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.