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Expensive security services, equipment and other efforts to combat employee and customer theft increase financial liabilities for retail merchants. Security and crime prevention needs can be quite costly, especially if applied solutions do not provide reasonable return on investment (ROI.)
Security investments should yield positive results in three basic areas:
• Cost containment and expense control;
• Income sustainability to help you keep what you earn; and
• Business growth by offering competitive prices and increasing your customer base.
At the end of the day, the idea should not be to win the battle and lose the war. King Pyrrhus of Epirus fought several successful battles against the Romans in the third century B.C., but these victories came with a significant loss of lives including his best officers and fighters. King Pyrrhus concluded that "if he was victorious in another battle against the Romans, he would be utterly ruined." Scholars later described this quote as a pyrrhic victory, meaning the cost was not worth the effort. Installing moats and alligators around a business may stop a shoplifter, but it may also stop customers from patronizing a business that has more security than other needed services.
Exception base reporting (EBR), lights, cameras and other approaches are all good ideas as long as the right solution is applied to the right problem. Establishing a policy that requires employees to interact with customers is far less expensive than security cameras in every aisle and corner. Making eye contact, flashing a smile and saying hello tells customers that employees are engaged and committed to the success of the business. Shoplifters are more apt to steal when an employee ignores them, appears unfriendly, or behaves as if the customer is an unwelcome guest.
In some situations, employee training is the most cost-effective solution to preventing shoplifting and it allows the business to pass the cost savings on to customers.
Businesses often go to great lengths to strengthen their top financial lines only to lose earned income on the bottom line. Employees and customers directly account for better than 80 percent of financial losses related to theft. Look at it this way: let's just say an employee or customer stole a $5 item once a day, five days a week from a particular business. Within a one-year period, the business would lose $1,200. Unfortunately, if just five individuals were stealing the same amount for the same period from the same business -- well, you do the math. Every business owner would like to see a $60,000 boost to his or her bottom line.
Applied solutions designed to track employee theft differ from methods required to track and prevent shoplifting. Employees steal for a multitude of reasons; however, the most common is thinking they will not be caught. On the other hand, customers feel that their risk of being caught is greater than for employees simply because they are not as familiar with the business environment. Employees have a good idea of how much security the business has and where it is located. Customers tend to be a little more cautious when stealing in unfamiliar surroundings.
The best approach to preventing loss income due to theft is to think proactively. Here is a good example: a manager became frustrated when the business he was responsible for experienced consistent inventory and cash shortages. When he was asked whether he suspected his staff was stealing, he replied, "I don't trust anyone at this point." The manager's attitude could only exasperate his team's state of mind and promote an atmosphere of mistrust, suspicion and conflict. At this point, even honest employees may become dishonest or develop a do-not-care attitude.
Managers should meet with their subordinates frequently to discuss issues that negatively affect financial gain and business growth. Important information usually comes out of these meetings. Soliciting feedback on the root cause of shortages is an inclusionary activity that motivates the team to search for workable solutions. This is also a good time to reaffirm company policies regarding shoplifting and employee theft.
Business growth is stirred with sound plans and operating polices. However, it is important that employees understand the big picture, as well as the intent of policies. Here is an example: a young woman working at a convenience store was observed enthusiastically greeting each customer with a "hello, welcome and thank you for shopping with us today." When she was asked why she greeted every customer, she replied, "Well, they send around secret shoppers and if I don't greet customers, I will lose my job."
Greeting and paying attention to customers while they are shopping in your business is an effective way to deter shoplifters. Legitimate customers feel like they are shopping in a warm friendly environment and probably will pay a return visit. Potential shoplifters feel as if they have been placed on notice and the risk of getting caught goes up significantly.
Employees should be encouraged to follow policies because they believe they are making a worthwhile contribution to the business, not just to protect their jobs. Understanding the intended purpose of policies inspires sincerity and commitment. If the employee follows a policy only because they are forced to do so, their actions come across as robotic or just going through the motions. A potential shoplifter will spot and view this behavior as an opportunity to steal and will be more apt to proceed with committing the theft.
Shoplifters seek out isolated areas of the business where they can inconspicuously conceal products and leave unnoticed. Therefore, establishing a policy without telling your employees why they are expected to follow it defeats the purpose and could easily have an adverse effect.
Theft-related losses are passed along to legitimate consumers in order to keep the business afloat. Reducing losses with a comprehensive asset protection/loss prevention program allows businesses to offer products at competitive prices and attract new customers. To accomplish these goals, a business should complete a rudimentary assessment of its security before attempting to fix problems with expensive equipment and programs. Without basic proactive and preventive measures, it is impossible to properly calculate the most cost-effective solution for minimizing shoplifting and employee theft.
The best way to achieve cost containment, revenue sustainability and spur business growth is to ensure security programs and systems are introduced at a basic level before tossing big dollars at complex solutions. In most cases, high-tech solutions will require a level of human involvement anyway, so why not start with employee/management training.
Make sure all employees know company policy and why it is important to follow each policy. Employees should receive professional training on how to prevent shoplifting and effectively deal with rude, hostile and aggressive customers. A physical plant survey should be conducted to determine how to reduce the cost of lighting, locks, alarms and other security essentials. Once a determination is made regarding what is or is not working, a better decision can be made on investments for expensive, high-tech security solutions.
Jim Dale, CEO and president of The Tyde-Link Co., is a retail loss prevention and security expert with more than 35 years of experience as a regional asset protection manager for the world's largest chain of convenience stores.
Editor's note: The opinions expressed in this article are the author's, and do not necessarily reflect the views of Convenience Store News.