From the back office to the checkout: Critical strategies to mitigate retail theft By Daniel Linskey and Jodie Rae Jordan

In the past five years, the retail landscape and the relationship between consumers and businesses has shifted drastically. It wasn’t too long ago when shopping at malls was considered a family activity and consumers shopped at local stores where they knew and interacted with sales personnel.

Today, however, malls and interactions with employees are relics that accurately portray the way retail used to work. Retail companies have shifted their consumer model to focus on the online market, making it almost unnecessary to step foot in a physical store. This has resulted in changes to retail security programs.

Internal security protocols

According to the Retail Industry Leaders Association (RILA), in 2019, $68.9 billion (bn) worth of merchandise was stolen. The result of these thefts was an astonishing $125.7 bn loss in economic activity and 658,375 fewer jobs for communities nationwide.

The result of these thefts was an astonishing $125.7 bn loss in economic activity

While the direct cause of the substantial increase in retail theft can’t be pinpointed to a single root, it also cannot be exclusively attributed to the COVID-19 pandemic, economic hardship or the increasing inflation. Instead, we must evaluate the reduction in internal security protocols, the lack of arrest and prosecutions for petty theft and the tattered relationship between the consumers and the retailers.

Current retail security landscape

Looking at current business models, one of the biggest challenges that the retail community faces is the ability to ensure the implementation of security investments. Retailers are struggling to integrate security into their budget as it doesn’t increase their bottom-line value. However, what they’ll gain by investing in these programs is a reduction in retail theft, which in 2019 alone has cost retailers nationwide $69 bn.

With the implementation of security programs, retailers can identify patterns of vulnerability such as high-risk times and days or, more specifically, high-risk products in certain locations in the store that are targeted frequently.

Enhanced security protocols

Extensive security protocols and programs can help identify, mitigate and prevent retail theft trend

This provides an opportunity to develop enhanced security protocols to lower risk across the entire network of stores. According to VIRA Insight, during the COVID-19 pandemic, there was a shift in targeted items from expensive merchandise such as electronics to essential items and household commodities.

Extensive security protocols and programs can help identify, mitigate and prevent retail theft trends like this from negatively impacting businesses. Investing in security up front will save businesses millions on the back end. While this may not be attainable for small businesses, having an in-depth and comprehensive security program for medium- to large-scale companies is prudent.

Increased need for law enforcement

While individual security programs provide retailers an internal baseline to mitigate retail theft, it is imperative that we look to improve the law enforcement response and legal action as well. It is paramount that retailers form relationships with local law enforcement agencies and each other to provide evidence reports, video surveillance and lists of missing merchandise.

The goal is to help increase the potential for petty theft crimes to be prosecuted in court

The goal is to help increase the potential for petty theft crimes to be prosecuted in court. In communities and areas where petty theft continues to go unpunished by local law enforcement and prosecutors, there tends to be an exponential rise of thefts outside of the baseline. These areas slowly become hotspots for petty thefts and, in some cases, have gone beyond the trend of essential items to more expensive merchandise.

Psychological and sociological barriers

Showcasing the community value of retailers to local public officials and law enforcement is critical in improving what legal ramifications become common place. If retailers are not getting the support required from law enforcement and public officials, they could be forced to close or move, resulting in the reduction of employment and resources for that community.

In the current retail landscape, business models support a decrease in human interaction between the retailer and the consumer. While this model has been proven to benefit the retailer by improving efficiencies and increasing their bottom line, the result is an increase in retail theft as many of the psychological and sociological barriers to criminal acts against retailers are eroded.

Faceless corporate entity

This void allows shoppers to detach from the stores and the potential consequences of theft

When the pandemic struck and retailers were faced with the challenge of mitigating the spread of COVID-19 while trying to keep their network of businesses afloat, we saw an increase in companies implementing self-checkout options. According to a 2018 Efficient Consumer Response survey, retailers with self-checkout reported an increase in losses from 33% to 147% higher than stores with fixed checkouts.

However, it is not just the increase in self-checkout that has heightened the issue of retail theft but also the decreasing number of sales personnel. While the reduction in sales force costs the employer less, it further creates distance between the customer and the retailers. This void allows shoppers to detach from the stores and the potential consequences of theft. They are no longer stealing from an owner of a store; they are stealing from a faceless corporate entity.

Consumer-friendly security programs

To balance efficiency with risk mitigation, consumer-friendly security programs should be considered to the greatest degree possible. This doesn’t mean that metal detectors and armed personnel are required. We recommend training a small staff to be present toward the checkout and exits, not to encumber consumers but to interact and to associate a friendly face with the business while taking vigilant steps to identify potential shoplifters.

Security is evolving, and there are always new challenges and risks to consider

There’s no single solution to address the complex and ever-changing environment we currently live in. Security is evolving, and there are always new challenges and risks to consider. To best address these risks, Kroll security experts recommend:

• Employing a modern security program designed to address an ever-evolving threat landscape
• Training staff to engage in customer service/security and maximise personal interactions
• Engaging with fellow retailers to work with law enforcement and elected officials to help ensure an environment that prevents, not enhances, the opportunity for criminal activity

Multiple vantage points

Kroll’s Security Risk Management team offers a holistic approach to security, including all aspects of threat management, physical security, technical security, security design and engineering, countermeasures and information security.

By assessing risks from multiple vantage points, Kroll can help retailers better prevent, plan for and mitigate risks and respond to threats. Learn more about Kroll’s Security and Threat Management services. Listen to Kroll’s most recent Security Concepts podcast where our experts discuss the recent increase in retail theft around the country and steps that can be taken to mitigate risk at your business.