California Apparel News

Retailers know that the biggest threat of theft this holiday season doesn’t come from the shifty customer who darts off with that unpaid, brand-name sweater—it’s usually the associate behind the register who’s the pilferage mastermind.

Yearly losses from employees average $1,587 a person vs. the average shoplifting loss of $198, according to the recently released 2001 National Retail Security Survey conducted by the University of Florida.

More disturbing, the survey found that retail shrinkage is on the rise, totaling 1.76 percent of sales or $32.3 billion, up from last year’s 1.69 percent or $25 billion. Broken down, employee theft climbed up to 46 percent of sales and shoplifting fell to 31 percent—figures that may trend differently in economic slowdowns.

“Basically, the numbers indicate that anti-theft technologies are paying off, squeezing down on shoplifting, but leaving room open on the internal side,” said Richard Hollinger, the survey’s author and associate professor of sociology and criminology at the University of Florida. “However, those shoplifting figures can go higher during tough economic times and in the face of layoffs. But, the same argument can’t be made for employee theft when people are lucky to have a job.

Hollinger said retailers slowly are beefing up their technology spending to tackle their own. Exception reporting is the latest technological advance. In the past, a sales associate simply rang up voids on the register or would “sweetheart” prices for friends—recording 48 cents instead of $48, for example. Hi-tech computer reports eliminate the problem.

The would-be thief also can get caught in the act with surveillance cameras positioned to monitor floor activity. Observers can watch a screen that also features an integrated feed from the register so a manager can witness a potential crime in real time or at least match up exception reports with the video.

Another measure helping deter crime is the use of signature pads to record credit card sales. The electronic systems, an outgrowth of the paperless trend, are linked to companies’ headquarters and feed into the bank card companies. In the last three years, Bloomingdale’s, Macy’s and other department store chains have adopted the signature pad system, often to the customer’s frustration.

“It took awhile—people didn’t like it, especially those not comfortable with technology,” said Daniel Butler, vice president of retail operations at the National Retail Federation. “But, it eliminates carbon receipts and papers with credit card numbers just lying around.”

Constant communication and training is also key, say retail experts, especially during the holidays when a wave of young recruits staff the floor.

“Oftentimes, internally, employees who might be young and naive to the penalties get themselves into trouble,” Butler said. “They might not realize the implications of taking something for a friend. Managers need to let them know.”

Those nabbed for stealing a $400 item are guilty of a misdemeanor and, depending on a judge’s leniency, may or may not pay a fine. The crime turns into a felony if the item purloined is worth $401 or more, and can lead to a one-year jail sentence, according to Jack Richter, the public information officer for the Los Angeles Police Department (LAPD).

One of the biggest innovations making a dent in external theft is anti-shoplifting tags that can be implanted into product packaging or the product itself.

“Typically, anti-shoplifting activity decreases by 50 percent with the use of these tags,” said Lee Pernice, retail marketing manager of Boca Raton, Fla.-based ADT Security Services (formerly Sensormatic Electronics), among the largest manufacturers of the tags and sponsor of the retail security survey.

ADT, which counts Federated Department Stores Inc., Saks Inc. and May Department Stores Co. as its clients, says clients see a return on their $10,000 to $100,000 investment in one year.

For smaller retailers, who may not have the wherewithal to implement costly systems, source tagging is the next frontier, Hollinger said. The practice is already occurring in the health and beauty and music industries, where electronic article tags are attached to goods at the source of distribution. Coach and other apparel companies are testing prototype bags with tags already implanted in the product.

Technology aside, however, customer service is still the key to mitigating shoplifting, according to Hollinger.

“Ask customers questions and watch what shoppers are looking at. A shopper looks at merchandise, and a shoplifter looks for cameras in corners and on the ceilings and they’re looking for deadspots of activity,” he said.

Malls and boutiques can get a handle on shoplifting by working with local law enforcement agencies. Detectives from LAPD’s West Los Angeles division have had bimonthly meetings with security directors from the Century City Shopping Center and Westside Pavilion, Hooshmand said.

Boutiques, which are often run by single proprietors, also are beginning to create informal neighborhood watch groups. Stores on Melrose Avenue in Los Angeles, including Xin, Lotta, and Masse, implement the grapevine when wayward shoppers are on the prowl.

“It’s kind of like word of mouth,” said Neely Shearer, co-owner of Xin. “If somebody suspects something, they call their neighbors. We just work together.”