The figures, as always, are alarming.
According to the latest “National Retail Security Survey” from the Security Research Project at the University of Florida, American retailers lost approximately $33.6 billion in 2003 to inventory shrinkage, the vast majority of which was caused by theft.
And that’s not counting crimes that do not affect inventory, such as missing cash and check and credit card fraud. Those cost American retailers an additional $2 billion last year, according to the survey.
Survey respondents reported that 47% of their inventory shrinkage was due to employee theft, 32% came from shoplifting and 6% from vendor fraud. Of employee theft alone, the report says, “there is no other form of larceny that annually costs American citizens more money.” The survey goes on to report that retailers of wine, spirits and beer reported even higher rates of employee theft. Those retailers in the survey reported that 65% of their inventory shrinkage was due to theft by employees.
But shoplifting is nothing to sneeze at, either. According to the survey, American retailers lost $10.7 billion to shoplifting in 2003, which is about the same amount that the nation loses to auto theft each year.
Long story short, if you’re running a retail operation, you’ve been stolen from.
Just ask Joe Gomes, manager of Blanchard’s, a busy beverage-alcohol store in the Boston suburb of Allston. What kind of crimes has Blanchard’s experienced over the years? “All of them,” said Gomes.
It was a wave of shoplifting several years ago that first spurred Blanchard’s to get tough on crime. “It was very serious,” reported Gomes. “These were groups and they were aggressive. If you confronted them, they’d attempt to fight. We had a number of fights in the store and my life was threatened on a weekly basis.”
What stopped the problem? “As soon as the first person was arrested — and we made sure to be there, in court, so they’d get put away — it stopped,” said Gomes. “For a while, anyway. Every few months, a new group would start, but every time someone got arrested, it would stop.”
The effect, however, was cumulative. Gomes made it a point to press charges and show up for the resulting court appearances. Many times, however, defendants would postpone, reschedule and delay court dates, hoping Gomes and Blanchard’s would give up. They didn’t.
Establishing A Rep
Blanchard’s succeeded in establishing a reputation for itself among shoplifters. The last time Gomes had to go to court — and he had to go four times because the defendant kept postponing — was two years ago.
The WJ-HD300 (above) is Panasonic’s latest digital video recorder (DVR); the WV-CF224 vandal proof dome camera (below) is commonly used in retail applications, especially where there is heavy traffic.
Yet even for the pro-active Blanchard’s, as for all retail operations, the possibility of crime is ever-present. There will always be criminals and they will always be thinking of new ways to make a buck. Just a few weeks ago, Blanchard’s was the victim of an organized burglary ring that has struck several retail establishments in the Boston area. “They travel in stolen cars. They kick in your front door and they steal thousands of dollars worth of cigarettes,” Gomes reported. “Even though your alarm goes off, they are in and out in less than 90 seconds. They wear masks and hoods so you don’t get video of them, and since they are in stolen vehicles, they can’t be traced that way.”
So, what’s a retailer to do?
Crime is sort of like cockroaches. You can’t completely eliminate the problem. Constant effort can, however, keep it from taking up permanent residence in your store.
And some of the best deterrents remain the good old-fashioned ones, say retailers. For employee theft, retailers cite screening of new hires and tight cash policies at the point-of-sale. They take measures to protect their operations in vulnerable places, such as at the back door, and at vulnerable times, such as near the change of shifts for cashiers, when an employee who has been skimming money from the register — selling goods without ringing them in — has to take that extra money out of the cash drawer. Many employ professional shopping services or even their own friends and family to pose as customers to watch how the cashiers ring their purchases.
Good lighting and visibility deter both would-be robbers and would-be shoplifters.
Many retailers invest in security guards during especially busy times, such as holidays. Brian Moore, owner of Kappy’s, a three-store operation headquartered in Medford, MA, uses off-duty or retired police officers during those busy times. “They are definitely a deterrent,” he said.
As are the sight of cameras in the store. Any cameras. One age-old trick, used by many retailers, is to install dummy cameras, to make their store’s surveillance system seem even more extensive than it is.
Many retailers put a display monitor at the entrance solely to impress upon people that they are being watched. At Kappy’s, a sign next to the monitor further states that the store is taking measures to prevent shoplifting. Moore believes that the cameras also dissuade would-be burglars. “Break-ins are somewhat sophisticated. I think they do case your store beforehand and an active camera system does act as a deterrent,” he explained.
And more than ever before, technology can help deter, prevent and catch retail crime. “The technology now is absolutely incredible,” said David Bitton, chief operating officer for Supreme Security Systems, the largest independent security firm in New Jersey. “The functionality, even for the smallest retailer, is amazing. Right now, a digital surveillance system, using color cameras, providing much higher quality images, costs less than what a black-and-white camera system, with a video recorder, cost five years ago.”
Digital Recorders Popular
Digital recorders are becoming standard. According to the “2003 National Retail Security Survey” from the University of Florida, almost three-quarters of all the responding retailers reported using digital video recording systems, an increase of approximately 25% from the previous year.
Unlike their predecessors, VCRs, digital recorders do not use tapes. Images are stored digitally, either on hard drives within the recorders themselves or on a PC. This makes them much easier to use. No one has to remember to change the tape. No one has to organize the tapes. Most often, a digital recording system will store images until it runs out of space on the hard drive it is using. Then, it will automatically begin to record over the oldest images first. At the Kappy stores, for instance, the digital systems will store images for 30 days before they are overwritten. “And of course, you can go to an image and burn a CD of it, if you are going to need it,” said Moore, who recently did just that to aid the police in their investigation of a suspect in a case that did not involve Kappy’s itself.
Digitally recorded images are easier to search than those on videotape. Rather than play through an entire recording, a retailer can enter a time and be immediately brought to the image wanted. At Kappy’s, for instance, Moore will often watch specific time periods, such as the half-hour before the cashiers’ shift ends.
Digital systems can also allow for remote viewing. Central Avenue Liquors in Jersey City, NJ, is a 4,000-square-foot store, specializing in wine. The operation, a client of Supreme Security Systems, uses a 16-camera digital system. “I can dial in from anywhere, from home, say, and shuffle through all the cameras, seeing what is going on in the store,” said Neil Stolz, Central Avenue Liquors’ vice president.
Supreme Security’s central station monitors alarms for fire and life safety, intrusion and industrial processes.
“These camera systems, they’re not just good for security, they can be a fantastic management tool,” said Bob Schneider, sales manager at Supreme. “You can see if your employees are doing the right thing, how they’re interacting with customers, the ebb and flow in the store when you are not there.”
The latest surveillance systems also allow more choices when it comes to when and how they record. They can also be set to record only during certain hours of the day. They can be set to record only when they detect motion, or even only when they detect motion in a certain area within their view. For instance, using the system’s software, a retailer can set a camera to record only if there is motion in an area around the safe in the back office.
Two new Sony products include the SNC-RZ25N (top), a pan-tilt-zoom camera with a day/night function and a motion detector, and the HSR-X206 Hard Disk Recorder.
Sony has introduced “all-in-one network cameras,” starting at $300. These cameras contain built-in web servers and network interfaces. When contacted by a PC using a standard web browser, these cameras allow for remote viewing. Sony’s SNC-RZ25N pan-tilt-zoom camera, priced at $1,600, has a day/night function which can be set to produce images in color during daylight conditions and clearer black-and-white ones at night. This camera, which is equipped with a motion detector, can be set to send an alarm email, with the resulting recorded image attached, to a specified email address.
Panasonic has taken a different direction with its digital systems. Rather than use a personal computer to store images, many Panasonic recorders contain their own hard-drives on which the images are stored. “PCs are vulnerable to intrusion attacks, hardware failures and over-utilization,” said Steve Surfaro, manager of the enterprise projects group at Panasonic Security. He pointed out that Panasonic’s dedicated digital recorders have multiple hard-drives, most typically four, and can have up to 26. “If one hard-drive fails, the others can reproduce images from the failed one,” he said. These dedicated hard-drives can also store larger, more detailed images than a PC, he explained. “Each hard-drive on our recorder contains 250 gigabytes of space,” he said. “That’s 25 times the storage of a typical laptop.”
Surveillance systems are a two-part equation. First, there is the recording system. Second, there is the camera itself. While there are digital cameras, digital recorders can use traditional, or analog, cameras. In other words, a retailer, looking to save some money, can upgrade to a digital system and keep the operation’s existing cameras. “You can literally use any camera, even a $100 one,” said Kappy’s Moore, who has used digital surveillance in his three stores for the past five years. “Of course, a $100 camera isn’t going to give you close to the quality you would get with a $300 or $400 camera.”
Indeed, according to Panasonic’s Surfaro, currently, the best-quality surveillance system uses a digital recorder with high-quality analog cameras.
There are also “hybrid cameras,” which employ both analog and digital technology. “That’s the best of both worlds,” said Surfaro.
The newest technologies in the cameras themselves allow for very detailed images. A user can zoom in on an image, after the recording has been made or even live, and see detail. Kappy’s Moore remembers being invited in to the local supermarket to see their surveillance system. “They had a half dozen of their cameras equipped with a joystick,” he said. “You could point the camera, zoom in and read someone’s shopping list over their shoulder.”
Another development in cameras is “object tracking,” the ability to automatically follow a certain object when it is moved. “A pan/tilt camera might follow a person when they walk by,” Surfaro explained.
One of the latest surveillance-system developments is the ability to integrate with a store’s point-of-sale (POS) system. Used with a camera aimed at the checkout, this integrated system produces video of the cashier ringing a sale with the transaction information being entered shown at the bottom. This enables a retailer to more easily spot when cashiers are “sweet-hearting,” or giving product away to friends, or “skimming,” pretending to enter a sale but really just pocketing the money.
What’s coming down the pike?
The developments in security and surveillance systems over the last few years, especially in the wake of 9/11, have been described as a quantum leap. Sony, for instance, has partnered with firms that create face-recognition and even behavior-recognition software. Systems can now be developed in which the faces of people recorded by a surveillance system are automatically checked against a watch-list. Other systems use algorithms and user-defined rules to determine when the behavior being recorded is suspect. Perhaps a person has been in an area for longer than normal. The system would automatically send an alert to security personnel.
“The status quo for a small retailer used to be a black-and-white system, grainy images burned into their monitor’s screen,” said Bitton, of Supreme Security. “The functionality now, the color, the quality of the images, for even the smallest retailer, is amazing. If you haven’t looked at security systems for a couple of years, you need to look again.”
SECURITY ACTION POINTS FOR RETAILERS
To minimize employee theft …
Tighten screening procedures for new hires and establish tight cash policies at point-of-sale.
Pay particular attention to the back door.
Focus on cashier shift changes, when skimmed money is usually taken from the cash drawer.
Employ friends, family or even professional shopping services to pose as customers to watch how cashiers ring up their purchases.
To minimize shoplifting…
Be proactive in pressing charges against shoplifters, and follow through even when court dates are postponed.
Maintain good lighting and visibility in the store.
During busy periods, such as major holidays, hire security guards.
Have plenty of cameras visible in the store; even dummy cameras serve as a deterrent.
Place a display monitor at the entrance.
Post signs that declare the store is under surveillance and that shoplifters will be prosecuted.
Checked Every Which Way
Boston-based Blanchard’s has had significant success combating fake ID use with a state-of-the-art identification checker called i-Dentify, from AssureTec Systems. The “black box” (seen here) uses some of the same technology being developed to fight terrorism.On weekend nights, Blanchard’s, a busy liquor store located near Boston’s many colleges and universities, puts an employee at the entrance to check IDs. “We don’t even want underage people in here when we’re busy,” explained Joe Gomes, the store’s manager.
However, the employee who is usually posted at the door has become a bit peeved. Blanchard’s pays her a bounty for every fake ID she catches. Before, she would typically catch two a night. The record was eight in one night.
But that income has dropped precipitously for her — ever since Blanchard’s became a pilot site for an identification checker called the i-Dentify from AssureTec Systems, a company based in Manchester, NH.
At first, of course, retailers simply eyeballed an ID, looking for where a kid might have tried to paste his picture over the real one on a driver’s license. Guidebooks were printed, and still exist, which record what every driver’s license from every state is supposed to look like. But with the advent of laser printers and color copiers, underage kids were able to produce fake IDs that could pass the eyeball test. So, states started adding barcodes and magnetic strips to their licenses. These contained the information from the front of the license, but the idea was that a kid wouldn’t be able to duplicate them. Machines that could read this information for retailers came on the market.
But guess what? Kids figured out how to duplicate these barcodes and mag stripes. “Yup, we’ve had fake IDs in here that had magnetic stripes with fake information on them,” said Blanchard’s Gomes.
Identification checkers, however, have evolved too. The system from Intelli-Check, a company based in Woodbury, NY, for example, not only reads the information in the barcodes and magnetic stripes of IDs, it verifies how that information has been encoded there. “Our software will recognize that this ID, for instance, looks like a New York State driver’s license. It will then compare the information encoded on this license to a template. Is every field encoded properly? Are all the fields in proper relation to each other?” explained Frank Mandelbaum, chairman and ceo of Intelli-Check.
The i-Dentify from AssureTec looks at the appearance of the ID. This system, a black box that looks “like 1950s Soviet technology,” according to Richard Search, executive vice president of engineering and product development at AssureTec, is anything but dated. This device, in the space of a few seconds, looks at the document under four different kinds of light, including ultraviolet and infrared, compares it to a database of different types of IDs, identifies it and then checks to make sure it has all the security features it is supposed to have. For instance, certain images are supposed to show up on some driver’s licenses when viewed under different types of light. For example, this ID is supposed to have a “glass-bead surface”; that one is supposed to have a certain strip of microprinting. The i-Dentify checks for them all.
The sophisticated technology used in these devices is being developed to combat terrorism. Still, some beverage alcohol retailers find the idea of investing in such a device — the iDentify currently costs $4,000 with a $500 per year maintenance fee — to be cost-effective. “When you consider the fines and the penalties — here in Massachusetts, a second incident will see you shut down for a day, and that alone might cost you $10,000 to $15,000 in sales — and it goes on your record and your cashier can be charged and you’ve broken the law and sold to a minor, it starts looking like it’s worth it,” said Gomes.
Meanwhile, the presence of this black box at Blanchard’s, which has been publicized by all the local papers and television stations in Boston, scares away at least as many holders of fake IDs as it catches.
That’s fine by Blanchard’s, even if that employee still wishes she was earning all that bounty money.