The recession has dealt retailers a double whammy: Sales are down for many chains, as consumers are reluctant to part with their cash, but merchandise is still going out of too many store doors without passing through the point of sale.

In a 2008 NRF survey, 74 percent of 116 participating retailers saw an increase in shoplifting for the year. According to the most recent National Retail Security Survey (NRSS), U.S. retailers attributed 34 percent of their companies' inventory shrinkage to shoplifting, at a cost of $11.8 billion.

"Not only have we seen a dramatic increase in shoplifting, we're also seeing people becoming more brazen in their attempts," says Tim Ruggiero, territory loss prevention manager for Barnes & Noble College Booksellers.

"It's becoming more challenging for me to come up with methods to give to my managers to deter and prevent [shrink] … In a word, they are frustrated." His division is seeing more forms of theft and fraud, like hot checks, fraudulent credit cards and gift card scams, Ruggiero says.

After seeing inventory shortages grow in 2006 and 2007, "I am very proud of our decrease in 2008," says Diane Holtz, president and COO of Pet Supermarket. "I do not believe that the economy helped us; I believe fighting back did."

Sunrise, Fla.-based Pet Supermarket has a three-step program to combat shoplifting and other theft: hotline reporting, exception reporting of the POS and customer service. "Over the last two years, we have developed a loss prevention department that involves everyone on the payroll," Holtz says. "We reward up to $500 for reporting a theft, which can be done anonymously."

The pet care chain advertises the hotline number for reporting any issue of harassment, theft or impropriety by stapling a business card containing the information to each employee's pay envelope.

Security consultant Chris McGoey also believes that employees can make a difference in reducing shoplifting. "Good customer service is still the No. 1 method for preventing shoplifting losses," he says. "Retailers that run skeleton crews looking to save payroll dollars now often end up paying for the decision later on the inventory shrinkage expense line."

Los Angeles-based McGoey operates www.crimedoctor.com, a multi-purpose security site. He says almost all retailers have seen an increase in shoplifting, a development he attributes, in part, to cutbacks in floor personnel after Christmas. He acknowledges that hard times have caused more shoppers to steal, but he also points to recession-related layoffs and store closures as employee morale-dashers, reducing the incentive to prevent shoplifting.

Technology, particularly video surveillance, can be an important LP tool for many retail chains during tough economic times. "Retailers are struggling to keep sales up, while at the same time theft is up," says Jumbi Edulbehram, director of the strategic channel for Axis Communications, a Swedish-based company offering products and solutions focused on surveillance and remote monitoring via network video.

The upside to the recession, he says, is that many LP departments are developing new and creative ways "to effectively leverage their existing resources."

LP departments are consolidating resources as the number of field investigator positions is reduced. "Many times, investigations are being conducted remotely by video, eliminating the need to travel to each store," Edulbehram says.

These departments are working to leverage the resources of other parts of their organizations, particularly the information technology department. In many retail organizations, IT "has the buying power and servicing power to purchase video solutions that will work on a network," he says. "Traditionally, LP departments have underutilized resources; this is their opportunity to shine by leveraging video for other departments and functions."

New video standard
Other uses for LP video include a true in-store customer count, monitoring checkout waits and measuring the attraction of displays by gauging how long customers linger.

As LP departments use video more frequently, storage becomes an issue. Axis recently introduced what it claims is the world's smallest video encoder with H.264 video compression. This new standard offers 80 percent better compression without affecting the video quality that is so important to investigations and prosecutions. The encoder allows retailers still using analog cameras to integrate this video into networks for remote access.

Many LP specialists are using staff training as a cost-effective means of reducing shoplifting, says Fred Tarasoff, owner of Canadian LP consultancy www.stopretailloss.com. "I have discovered that preventing and deterring theft is the best approach," he says. "The key is to have a potential thief think twice about whether they are under surveillance. Most thieves generally stick to the easy targets and avoid the tougher targets. This is where staff training comes in [as] thieves often will avoid establishments with a well-trained staff."

Tarasoff strongly suggests that retailers, even those with the latest and most advanced security systems, invest in shoplifting prevention training for all full-time and part-time staff, as he believes training makes stores tougher targets for shoplifters. The training also helps reduce employee theft, he says, because staff members become more involved in LP and feel encouraged to take more responsibility for reducing loss.

Prevention classes
The National Association for Shoplifting Prevention (NASP) offers retailers a free tool to combat theft by juveniles and promote positive customer service at the same time. Retailers can work with Jericho, N.Y.-based NASP to provide juvenile shoplifting offenders — whether they are prosecuted or not – with information on an offender-paid class to help prevent future thefts.

"Previously, the program was available only through referrals from the court system," says NASP communications director Barbara Staib. Since many parents of offenders are store customers, NASP thinks the program will appeal to retailers as a positive step for all concerned.

One big-box retailer recently began a pilot program with NASP to promote the class to juvenile offenders. "We think this is a better way to bridge customer service with shoplifting, to help kids learn how this act can affect their future and to open communication with parents," says the retailer's head of LP. The chain offers the program to any juvenile, even those that are not prosecuted. "We are giving parents an important tool and letting them know that we are going to see their family through this."