Caught in the act!

Retail theft remains high but grocers are using some reliable crime stoppers such as cameras and public view monitors in new ways. Shoppers struggling to make ends meet may be tempted to swipe a package of meat or a few cans of baby formula to feed their families. It can be more tempting when they realize that there are fewer staffers in the store watching them, significantly reducing their chances of being caught. However, it is not just individuals acting alone in moments of desperation causing retail theft to spike. Organized retail crime (ORC) rings are using social media to target retailers and wipe their shelves clean of high-value items such as razors and pharmaceuticals that can be quickly resold on the black market. “Retail theft is at the highest levels we have seen in five years, and the trend is expected to continue,” says Mike Creedon, vice president of sales and operations for ADT Retail Solutions, based in Boca Raton, Fla. “Supermarkets have been among the top categories over the past few years when it comes to shrink as a percentage of sales.” According to the Arlington, Va.-based Retail Industry Leaders Association’s (RILA) 2011 Crime Trends and Leading Practices Survey, more than half of respondents reported an increase in the frequency with which organized rings committed shoplifting and 41% saw an increase in shoplifting by individuals acting alone. Sixty-four percent of respondents reported an increase in theft of pharmaceutical products. With fewer associates in the aisles to curtail shoplifting, retailers are turning to equipment and technology to fill the gaps. While some supermarkets are investing in state-of-the-art loss prevention systems in their stores—especially when it comes to new construction—many are looking for ways to maximize their existing equipment. Public view monitors—which have been typically positioned at the entrances and exits to display images of shoppers as they walk in and out of the store—are moving into aisles such as HBC where there are high-value, high-theft items. “Grocers and other retailers are putting public view monitors at eye-level in high-shrink areas,” Creedon says. “The monitors can be running ads or other video and switch over to a public view as a motion sensor detects someone in the area. One thing criminals hate is to see their face on a monitor.” Connecting the public view monitor to a system that can alert store employees when something out of the ordinary is taking place can increase their benefit. “Perhaps the liquor department is not open and a customer walks into the area,” says Jim Finley, managing partner for Camtronic Security Integration, a Wilmington, N.C.-based loss prevention equipment provider. “The public view monitor can then activate an alert to the customer service desk that someone is in the area.” This is especially useful at times when staffing levels are low, says Jay Linton, managing partner at Camtronic. “Stores are getting hit late at night because they know there are fewer workers in the store,” he says. “In addition, it can help improve customer service as it can signal that someone is in a particular department and may need help.” In an effort to maximize their existing equipment, Finley says that grocers are looking to reposition and redeploy previously installed cameras. “What we’re seeing is that retailers are leveraging existing technology and complementing what they have,” he says. “They are taking those cameras that they implemented in better times and rethinking how to use them, perhaps with more focus on high-theft areas.” Making video accessible remotely can also leverage grocers’ investments in equipment and resources as loss prevention managers can analyze video without having to make a trip to the store where the incident occurred. ADT Hosted Video service, which was introduced last year, provides retailers with a hosted video recording and management system centrally managed by ADT. Using an Internet connection and Internet Protocol cameras, retailers can access their video remotely from anywhere. This offers them the convenience of centralized video storage without the cost, equipment and maintenance of storing and managing their own video on-site, company officials say. A better view Internet-based video management and video analytics also help retailers maximize their resources, experts say. “An immediate situation, such as a flash mob entering the store or a shelf sweep can be recognized in time to react,” says Debjit Das, vice president of global marketing for Verint Video Intelligence Solutions, based in Melville, N.Y. “Viewing hours and hours of video also takes up valuable resources, and ORC gangs move fast and hit multiple locations quickly, so grocers are looking at things such as facial recognition and license plate recognition so that they can prevent them from hitting the next store.” Improved camera technology is enabling grocers to install fewer cameras to cover the same amount of area, say industry observers. “They can cut the number of cameras from four down to one or two because the viewing area is larger,” says Steve Gorski, general manager, Americas for Mobotix, a New York-based provider of high-resolution video systems. He says although budgets are tight, retailers need to invest in megapixel cameras if they want to use the images for identifying and prosecuting criminals. “While analog cameras are inexpensive, today most people have cell phones that are more powerful and produce higher-quality images,” he says. “You have to be able to tell if it is a man or a woman, their race, their age, etc.” Another way that grocers are justifying their investments in loss prevention technology is to use it for more than catching potential thieves. “Cameras can be used as a business tool, so the costs can be shared with the marketing department in some cases,” Gorski says.  “They provide information on where people go in the store, how much time they spend in a certain area and staffing levels, among other things that can improve marketing, merchandising and customer service.” The connection between the loss prevention and IT departments is also becoming much stronger, say observers. “Loss prevention is no longer reporting to the COO or CFO; they are reporting to IT,” says Derek M. Rodner, vice president, product strategy for Agilence, Inc., a Camden, N.J.-based provider of POS video auditing systems. “And there is an IT person working on the LP team.” As prices drop and technology improves, grocers are also turning to electronic article surveillance (EAS) tags and tamper tags—near-permanent tags that can be placed on outer packaging and are hard to remove—which make it more difficult for ORC rings to resell the products. “Tamper tags, which can be used with or without EAS, have been making a big dent in shrink numbers,” says Patrick O’Leary, vice president, supermarkets and hardgoods for Checkpoint Systems, a Philadelphia-based provider of loss prevention systems. Depending on the graphics and whether the tags are EAS enabled, they cost between a penny and 7 cents, O’Leary says. “When it comes to loss prevention, there is a huge focus on meat nowadays, as well as energy drinks.” He says the tamper tags make it more difficult to resell the items, as the packaging is often damaged when thieves try to remove the tags. In addition, the tags can be customized to provide information about the retailer where the product was to be sold. “The tag can say something like ‘this product was offered for sale at XYZ retailer. If you are seeing it for sale somewhere else, call this number,’” he says. Secure displays In-store displays and fixtures are also playing a role in curbing ORC theft, say observers. “If you make it a bit of an obstacle course, but not so much that you are deterring legitimate customers, they will go to another retailer,” says Tony Kadysewski, marketing communications manager for Wilkes-Barre Pa.-based Trion Industries, a fixture manufacturer. He says several anti-theft options are popular with grocers, including anti-sweep hooks and fixtures with mechanisms that allow only the front-most item to be removed. Product is dispensed one at a time while the balance of product is secure. “We’re also seeing interest in pick-card systems, where the customer takes the card to the cashier, who has the item at the check stand,” he says. Some grocers are looking to install slow- and controlled-feed fixtures for high-theft items, particularly in the pharmacy. “Almost everything we do now has a loss prevention element to it,” says Tom Valiulis, vice president of marketing and business development for Rockford, Ill.-based Southern Imperial, a fixture manufacturer. The company offers SelectSafe and DispenseSafe fixtures, among other anti-theft equipment. “There has to be an open environment for the consumer but a controlled environment for the retailer.” He adds that grocers are employing a mix of techniques to prevent shelf sweeping, including systems that can send alerts to store personnel or sound alarms if a certain number of items are taken from the shelf at one time. “This is really geared toward the pharmaceutical and HBC areas where there are high-theft items such as razor blades and smoking cessation products,” says Valiulis. “Thieves are aware that grocery stores generally have fewer store associates in these areas than a drugstore chain would.” While grocers have to combat theft from outsiders, the criminals could also be staffers. One place where grocers are using loss prevention technology is at the checkout to detect sweethearting—the practice of employees giving discounts to themselves, other employees, friends and family—which observers say is more prevalent in the grocery industry than in other retail segments. “Sadly, the explanation is that people have to eat,” says Jumbi Edulbehram, vice president of business development for Carlsbad, Calif.-based Next Level Security Systems, a provider of networked security solutions. Edulbehram says video is also aiding in identifying items left on the bottom of the basket. “If something goes by the video and doesn’t get added to the transaction, the cashier gets an alert,” he says. Camtronic is a distributor of the ScanCam, technology from Auckland, New Zealand-based Zenith Asset Management Ltd. that is designed to detect when an item has not been added to a transaction. Used in conjunction with a grocer’s existing POS system, the ScanCam confirms with a flashing LED that items that have gone past the scanner have been added to the transaction. “[The light] provides a great visual when reviewing video for potential sweethearting,” Linton says. Helping themselves Self-checkout is one area where grocers experience a high rate of theft, observers say. While grocers weigh the value of offering self-checkout as an option, those who keep the technology in place are looking for ways to reduce shrink. Rodner says some grocers are looking to install Agilence’s Hawkeye, a POS video auditing solution that enables retailers to identify losses caused by operational errors, promotion execution, systemic errors and fraud such as sweethearting, at self-checkout as well as traditional checkouts. “For many grocers, the jury is still out on whether the self-checkout model is the right model for them,” Rodner says. “But if they keep the self-checkout, customer satisfaction, speed and the security of the product are key. The question is how do you make it user friendly and secure enough so that you are preventing loss.” Security is also becoming an increasing concern as grocers add mobile POS to the mix, Rodner says. “With mobile POS, someone is walking around with a scanner and putting things in their cart, and that is hard to track” he says. “We see this becoming a real issue for grocers over the next 24 months.” Malay Kundu, CEO of Cambridge, Mass.-based StopLift, says the self-checkout has become a favorite target for thieves. “At the self-checkout, there are 50% to 100% more scan avoids—leaving stuff in the cart, bagging things on the floor, stacking items, etc.—than at a traditional checkout,” he says. The company’s StopLift Checkout Vision Systems is a software-based checkout vision systems analyzes CCTV video from existing cameras to detect various forms of theft, training error, and operational analytics at the self-checkout. “It sends a real-time alert to the person overseeing the self-checkout when an item has gone by the camera but does not show up on the transaction,” he says. Many grocers are also turning to business intelligence software to enhance their loss prevention efforts, observers say. “We can help grocers benchmark their shrink in all of their stores and analyze their efforts to reduce it,” says Marek Polonski, vice president of Applied Predictive Technologies (APT), an Arlington, Va.-based provider of business intelligence software. He says it is important to look at characteristics that cannot be controlled—including surroundings, store demographics and physical layout of the store such as the number of exits and entrances—as retailers look at how their stores perform when it comes to shrink. Then there will be a clearer picture of how particular loss prevention measures will impact shrink. “What is the impact of adding cameras in a certain area, for example,” he says. “Is it a 0.2% reduction in shrink or a 2% reduction in shrink?” Bentonville, Ark.-based Walmart used APT’s Test and Learn Management System to evaluate a new loss prevention fixture for baby formula prior to rolling it out across the chain. “We wanted to look at the total impact on both shrink and sales,” said Bobby Rickard, senior manager for the retailer, during a presentation at the National Retail Federation 101st Annual Convention held in New York earlier this year. “Looking at results from a group of test stores against a control group, we found was that there was a good impact on shrink and not much of an impact on sales and we used that knowledge to go forward.” Business intelligence can also ensure that managers are quickly made aware of problems and take corrective action. “You don’t want the pertinent information to be buried on page 39 of a 50-page report that is being sent out to store managers,” says Dave Andrews, director of marketing communications for Reflexis Systems, a Dedham, Mass.-based provider of business intelligence. “You can set targets for shrink—which can also include loss due to freshness issues with meat, seafood, produce, etc.—and an alert can go out when those targets are not met and the store manager can be prompted to take corrective action. Grocers can also monitor social media and if they are being targeted by a flash mob for a certain time, take the proper precautions.” “This is important because it brings together a lot of isolated loss prevention systems that are already in place,” says Keshav Shivdasani, Reflexis’ manager of marketing and strategic alliances. “Say a camera spots someone coming into the store with a lined ‘booster bag’ to try to beat the EAS system. A real-time alert can be sent out to the person in the store who is on the clock and responsible for loss prevention. The whole idea is to stop the theft before it happens.”