When asked if criminals have any compunction against targeting state-owned liquor stores because they are a government entity, the people in charge of protecting the security of these stores just laugh.
Nope. To would-be thieves and fraudsters, including employees who would steal, a state-owned liquor store is just another target, like any other retail operation.
And retail crime is a big problem. According to the Global Retail Theft Barometer, an annual study done by Euromonitor International, funded by Checkpoint Systems, American retailers lose, on average, 1.5% of their sales to theft. The two main sources of loss: employee theft and shoplifting.
In at least one way, however, the New Hampshire Liquor Commission (NHLC) has a distinct advantage over private retailers. The NHLC has almost 30 of its own sworn law-enforcement officers in its enforcement division. One of these officers devotes time to constant security and loss-prevention training for NHLC store employees. She also is always available to do impromptu vulnerability assessments for any of the state’s 77 stores. Three other NHLC law-enforcement officers handle the investigations of crimes against the stores.
Still, said Scott Dunn, NHLC’s deputy director, the enforcement division receives reports of shoplifting from its stores on a daily basis. “We have even found that some shoplifters will take orders, from a restaurant or bar in New Hampshire or from another state, for what liquor to steal,” he said.
All Hands On Deck
Shoplifting is very common. According to the National Association for Shoplifting Prevention (shopliftingprevention.org), a nonprofit organization, one out of every 11 people has shoplifted. And these shoplifters report being caught an average of only once every 48 times.
As with other crimes, said New Hampshire’s Dunn, shoplifting can’t just be eliminated once and for all. It is more a matter of constantly “deterring, delaying and detecting.” “People think that if they put a fence around a piece of property, for instance, they are preventing crime, but what they are really doing is delaying someone if they do try to steal,” he explained.
The constant deterrence efforts are important, however. “Studies have shown that 60% of all shoplifters return to the stores they’ve stolen from,” said Bill Bregar, president of Loss Prevention Systems (losspreventionstore.com), a consulting firm based in Atlanta, GA. He added, “And they bring friends.”
Shoplifters come in all shapes and sizes, according to Bregar. (His firm once caught a shoplifting nun.) Diane Wurdeman, retail operations manager at the Department of Liquor Control (DLC) in Montgomery County, MD, agreed. “We have seen all manner of shoplifters: all ages, all ethnicities, both genders,” she said.
“And shoplifters try to blend in with the other customers by how they dress and act,” Bregar pointed out. “It could be the rich kid who has money in his pocket, it could be the bored housewife. There really is no profile. It’s not just the scruffy-looking guy.”
There are, however, different types of shoplifters. Most shoplifters, Bregar said, are “impulse shoplifters.” “A lot of the time, they are normal people who give in to temptation. If they are given an opportunity – dim store lighting, high shelving that gives them a feeling of security – they will steal. But studies have shown that most of these shoplifters will not steal if they have been greeted during that visit,” Bregar explained.
The “amateur shoplifter” is a little more serious about it. “When they walk in, their intent is probably to steal from you,” said Bregar. “They steal for themselves and for family and friends and are not as easily dissuaded as the impulse shoplifter.”
The third type of shoplifter has gotten a lot more press recently: “the professional shoplifter.” “This type is stealing to resell. He views shoplifting as his job,” said Bregar. “For this type, getting caught or arrested is an inconvenience.” Because of this, interestingly, this type of shoplifter can be dissuaded. “The professional is working on volume,” explained Bregar. “He or she might only be getting 10 cents on the dollar for the merchandise. If they see a camera system or an electronic article surveillance (EAS) system, such as from Checkpoint, they may pass on that store because they don’t want to be slowed down.”
Organized retail crime (ORC) is a form of professional shoplifting. Often, said Bregar, while adults run the ORC ring, the people doing the stealing are juveniles. A group may enter a store all at once, overwhelming or distracting the staff, and even strip a store of merchandise. Brian Davis, director of national accounts for 3xLogic, a surveillance-equipment company, reported that ORC rings have targeted beverage-alcohol retailers in some regions. “In Arizona, California and New Mexico, there have been ‘beer runs,’ when groups just run in and grab all the beer they can,” he said, “while, on the East Coast, the cases have involved snatching cigarettes.” The 2013 Organized Retail Crime survey done by the National Retail Federation found that 93.5 percent of all retailers have experienced professional or organized retail crime.
But for all retailers, including state-run liquor stores, a balance must be struck. “You can’t just lock all your products up,” pointed out Rich Mellor, senior advisor for asset production for the National Retail Federation (NRF) (nrf.com). “Customers need to touch and feel the products.” Experts say that, when customers can’t do this, sales plummet. “You lose the whole art of retailing,” said Bregar. “Presentation, of a product with a gorgeous bottle is lost when everything is locked up behind the counter.”
Luckily, however, one of the best ways to deter shoplifting is also one of the best ways to provide good customer service. “Making eye contact with people as they walk into the store and greeting them is the classic deterrence measure,” said NRF’s Mellor. “Now [the potential shoplifter] knows you know they are in the store and you know what they look like.”
“What I teach store employees is that, when you talk about customer service, when you talk about preventing underage sales, when you talk about preventing shoplifting, you use the exact same approach: say hello to everyone, ask everyone if they need help,” said Montgomery County’s Wurdeman.
Many retailers and loss-prevention specialists cite the WalMart greeter as an example of this tactic. And Mellor, who was once in charge of loss prevention for a jewelry business, suggested taking it one step further, by asking customers their names as part of the greeting. “Most people will automatically answer that question truthfully,” he said, “and now, that shoplifter is not going to steal because you know his name.”
Scott Dunn of the New Hampshire Liquor Commission says employees at the NHLC state stores are taught “the 5 to 10 rule,” which is if the employee is within five to ten feet of a customer, they should greet them and, if 10 feet or more away, they should make eye contact.
Eyes On The Prize
Camera systems have their place in a store’s security system, but they don’t always deter shoplifters, according to Bregar. “That’s because they know you are not watching those images right then,” he said. However, technology may be developing to help with that. Some camera systems can be set to send alerts or alarms, even an automatic message over the store’s public-announcement system or a text sent to a manager’s cell phone, when the camera records an event of a certain type. “If you have a product of high value, a champagne for instance, you can set a box around that area and, if the camera records a person lingering there for longer than a certain time, it will send the alert,” explained Brian Davis, director of national accounts for 3xLogic, a security-equipment company whose camera systems are in use by a number of control states, including Virginia and North Carolina.
Davis also pointed out that video images are important when it comes to determining who committed a crime after the fact and in building a case against them in court. Retailers can also post pictures of shoplifters from their security systems for the employees to see, including posting them at all the locations in a chain. Control-state agencies, including the NHLC and the Montgomery County Department of Liquor Control, are particularly good at sending out notices to all stores, often by email, when shoplifters or other thieves have struck a location.
Both the NHLC and the Montgomery County DLC value their camera systems and are constantly upgrading their capabilities. “It’s a little too expensive to do all at once,” said the DLC’s Wurdeman. In New Hampshire, the focus is on making the stores’ camera systems all web-based. That way, enforcement officers can access a camera anywhere in the system and get live shots.
Store design is also crucial. New Hampshire’s Dunn as well as many others at the NHLC have attended formal training in store design. “You want to harden the site to make it less appealing to thieves without harming the shopping experience for customers,” said Dunn. The Montgomery County DLC also considers security and loss-prevention when it comes to store design and store displays. Because vodka is a very commonly shoplifted item, in the DLC’s stores, the vodka displays are always kept in sight of the check-out lanes. Also, when it comes to displays and signs, “Our first priority is to check if it blocks the view of any of the cameras, over anything else,” said Wurdeman.
Benefit-denial devices, such as a locked cap on the bottle that must be taken off at the check-out, can also deter theft.
These devices can also be used as part of an electronic article surveillance (EAS) system. Those are the systems that set off an alarm if a product is taken past a sensor at the door of a store when its tag or bottle cap has not been deactivated. A store selling rare wines in London, called Hedonism Wines, for instance, recently began using such caps, customized with the store’s logo and colors, to protect wines worth up to £100,000 each. The caps were produced for the store by Alpha High Theft Solutions, a division of Checkpoint Systems (alphaworld.com). The advantage of these systems is the product is there, to see, to touch, to examine, but is also protected from theft.
Security and loss-prevention people from control-state agencies find themselves contemplating other types of crime. One concern: following the payment card industry (PCI) rules and regulations about debit- and credit-card transactions. Although payment-card security breaches have been much in the news lately, control-state operations, because they are small compared to other retail operations, are not considered likely targets for hackers. However, they do have to be PCI-compliant to avoid fines in the case of fraudulent transactions. And control state agencies can have special obstacles to overcome. The Montgomery County DLC, for example, uses a network used by all the entire government of the county. It was not practical to make it, with all its uses and users, PCI-compliant. The solution for the DLC: “We use a separate company, Shift 4 (www.shift4.com),” to process transactions,” explained Gus Montes De Oca, chief of operations. “We store no information on our own system.” Wurdeman explained, “Once the card is swiped, the transaction is immediately rerouted. We don’t keep any of the information, not even encrypted or tokenized. It’s not anywhere in our computers or wires.”
Another crime control state stores sometimes see: counterfeit bills. “We see that on a pretty frequent basis,” said New Hampshire’s Dunn. “We’ve got a great working relationship with the Secret Service.” (The Secret Service’s original mission, which it still carries out, is to prevent and investigate the counterfeiting of United States currency.)
The NHLC stores use counterfeit detector pens on large bills. Recently, Dunn reported, there was a wave of $20 bill counterfeits, which aren’t usually pen-tested, in his state. “The counterfeiters spend all day ‘washing’ their bills into the system,” he explained. “They might come to us and buy a nip bottle with a $20, then go to Burger King and buy something for 99 cents with a $20. At the end of their day, they might collect $2,000 of washed, clean money.” The NHLC has begun pen-testing $20 bills.
An Inside Job
For retailers in general, employee theft is a bigger problem than shoplifting. Employees tend to steal more than shoplifters do. According to a survey done by Jack L. Hayes International, a loss-prevention firm, the average loss per case for employee theft is $715.24, which is five and a half times more than the average for shoplifting cases, $129.12.
And employees tend to steal continuously, over time. “If you try to ignore employee theft, it is just going to get worse,” said Bregar.
And employee theft is very common. According to the Hayes survey, one out of every 40 employees was apprehended for theft by their employers in 2012. Bregar, who, over his 20+ years in loss prevention, has personally conducted over 2,300 employee-theft investigations, said, “When someone says to me, ‘Oh, no! My employees would never steal from me,’ then I know the employees are stealing, because the employer has stuck his head in the sand and isn’t looking for it.” Bregar has seen family members and childhood friends steal from retailers.
What can be done?
“The biggest mistake retailers make is that they don’t start talking about loss prevention right from the very beginning,” said Bregar. “They’re not establishing the employee’s mindset correctly from the beginning.” The Montgomery County DLC sets the tone right away. In addition to the normal procedures used by the county’s human resources department, the DLC itself does its own background checks of potential hires. “We will not take anyone with positives for violence, for theft or for drug and alcohol abuse,” said Wurdeman.
In its stores, the Montgomery County DLC uses a system that matches the video footage from the cameras trained on the store’s check-out lanes with the transaction data from its point-of-sale (POS) system. Loss-prevention experts strongly recommend having such a system. “To everyone around them, it may look like they are ringing up a bottle of Grey Goose, but they could really be entering a void or a no sale,” explained Bregar.
At the DLC, certain kinds of transactions, such as returns, are spot-checked on a regular basis using this system.
Some security systems, such as the ones from3xLogic (3xlogic.com), can be set to send certain kinds of transactions to the system’s “dashboard,” so a retailer can just click on a button for “no sales” and literally watch all the “no sales” that have been rung. 3xLogic systems can even be programmed to send an alert to the retailer’s cell phone, with the footage attached, any time a certain kind of transaction is rung, so that the retailer can review it seconds after it’s occurred.
When it comes to retail crime, “you try to eliminate as many pitfalls as you can,” said DLC’s Montes De Oca.
Deterring and detecting retail crime is simply a part of doing business.