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To Catch a Thief: Loss Prevention Conference Sheds Light on Theft

Retailers lost $41.6 billion in 2006 due to theft and fraud, according to the latest National Retail Security Survey. That’s up from $37 billion in 2005.

These figures may seem most daunting to store owners and manufacturers, but consumers, too, feel the loss.

The National Retail Federation’s 2007 Loss Prevention Conference and Expo held June 10-13 at the San Diego Convention Center showcased new technologies to thwart thieves.

Joe LaRocca, the NRF’s vice president of loss prevention, said that retail theft affects more than just the bottom line. “When criminals steal from retailers, consumers pay higher prices, the safety of innocent employees can be compromised, and shoppers looking for popular merchandise often cannot find it,” LaRocca said.

The real threat is not the petty teenage shoplifter, said Adell Sayegh, president and chief executive officer of Universal Surveillance Systems Corp., but the ones who are willing to clear a shelf of merchandise to turn a profit.

Known as organized retail crime, or ORC, this type of shoplifting ring has boomed in recent years due to the popularity of the Internet to peddle stolen goods.

As ORC strategies advance in technology and intelligence, so must anti-theft technology.

Sayegh estimates that 20 percent to 40 percent of all theft loss is through the use of “booster bags,” aluminum foil-lined bags that block electronic anti-theft systems. “Sophisticated professionals are now lining their own Coach or Gucci purses, so they’re never suspected,” said Sayegh.

USS Corp. is able to foil the use of such bags with a detection system that signals a subtle alert to pagers held by store clerks, who can then decide what action to take.


Let The Worker Beware

Lee Pernice, director of vertical marketing for ADT Security Services Inc., says half the industry’s annual losses comes from employee theft, which ends up costing each consumer a few hundred dollars annually.

ADT is now working with manufacturers to build sensors into each product, rather than tagging by hand, which saves labor costs, and it is a more efficient way to keep track of inventory.

“We also have developed exceptional reporting technologies that are linked to video. If a certain employee seems to ring up a suspicious amount of voids, for example, the camera will know to focus on that register,” said Pernice.

Another approach to combat shoplifting and employee theft are video/TV monitors with built-in cameras.

“The monitors look like a normal TV, but if you move within a few feet of them, the screen display changes to camera mode and you see yourself. If people think they’re being watched, they’re less likely to steal,” Pernice said.

While data analytics technology that tracks irregular transactions is commonplace, advancements in video analytics is the next big thing, Pernice says.

Eventually, cameras will be able to sense strange speeds, for example, and then send the video alert to those in charge.


Shrinking Sales

Theft alone is expensive, but according to a study at the University of Georgia, there’s one consequence of shrink that retailers should fear even more.

“Out-of-stock merchandise is any retailer or manufacturer’s worst nightmare. Studies show that if a shopper comes to a store and finds what he/she is looking for, the average consumer will buy more,” said Pernice.

If the shelf is empty, odds are the shopper will leave the store, or buy another brand.

While certain products such as baby formula and expensive personal care items such as Rogaine or Crest White Strips continue to account for a large portion of stolen merchandise, ORC groups will always target the most popular size, color or fashion, and anything that’s popular to buyers.

Since the explosion of the eBay Inc. online auction system, stolen goods are infinitely harder to trace, so the aim of retailers is making sure merchandise never leaves the store.

LaRocca and Pernice agree that loss prevention is the retailer’s responsibility.

“Companies need to invest in the cutting-edge technology that is now available, because losses from theft and fraud will only continue to climb,” said LaRocca.

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