How to stop retail theft and fraud
Here’s an unusual twist on identifying a shoplifting suspect. A man was recently arrested for shoplifting at a Kroger in Richmond, VA and according to the local paper
”’When we pulled up his mug shot at the jail, he had the same Dale Earnhardt shirt on in his mug shot as he did when he [previously] stole the TV at Wal-Mart,’ Gregg said. ‘It wasn’t too hard (to identify him).’”
Unfortunately, the more sophisticated shoplifters—especially those who belong to organized retail crime (ORC) rings—can’t be easily ID’d by their NASCAR t-shirts. The ORCs move from city to city, changing their identities as they go, and to catch these criminals loss prevention professionals must have the ability to resolve multiple identities and utilize all their data, even data siloed off in legacy systems.
As shoplifters slip through the gaps in loss prevention, it leaves consumers paying up for losses totaling nearly $41.6 billion in 2006 alone. In a previous post, we wrote that if you add to that the annual cost of property/casualty insurance fraud and retail fraud, American consumers spent over $600 a year per household paying for theft and fraud.
How widespread is shoplifting? According to National Association of Shoplifting Prevention
“…shoplifting has become one of the most prevalent crimes in the U.S., averaging about 550,000 incidents per day resulting in more than $10 billion worth of goods being stolen from retailers each year. That is more than $25 million in losses per day. Current estimates are as high as 1 in 11 Americans who shoplift in our nation today.”
To combat shoplifting it’s critical to access and utilize all the customer data across the entire enterprise. If you can figure out who is who in real time, then you catch the bad guys without upsetting the good customers.
While retail theft is at an all-time high, the problem is not all due to shoplifters. Actually, employees did the most damage in 2006. Of the $41.6 billion in last year’s losses, employee theft was responsible for 19.5 billion, followed by shoplifting, at $13.3 billion. Other losses came from administrative error at $5.8 billion, and vendor fraud at $1.7 billion.
How can retailers combat employee theft? For this, your data also needs to be able to tell you who knows whom. Here are just a few questions every loss prevention pro should ask:
- Are you about to hire someone who has been caught shoplifting in one of your stores? Are they working for you right now? Or a sister company’s store?
- Which employees are returning merchandise without identifying themselves?
- Who is purchasing at discount and returning for full price?
- Does a multiple-return item match a missing shipment?
- Which customers have multiple identities? And why?
- Do any of those identities correlate to an employee or vendor?
- Is there a relationship between an incident victim and an employee eye witness?
A successful loss prevention program, one that saves just 10% of shrinkage delivers the same effect on profit as opening 15 new stores, but with dramatically less risk and investment. Combining multiple analytics in real time ensures that good customers have great experiences, while the same system stops fraudulent transactions before they start.
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