Worth Bargaining For?

Conventional brick-and-mortar retailers face a number of threats. While the proliferation of e-commerce platforms has caused many retailers to adapt, companies with physical retail locations contend with threats that have historically eroded profits, including increased losses as a result of shoplifting. Risk managers worry about how this trend is impacting their total cost of risk—rightfully so, as criminal acts in retail stores increased 11 percent in 2018, according to D&D Daily, a news source for retail loss prevention, asset protection, and IT security.

The impact of shoplifting goes beyond inventory shrinkage and profit erosion. Criminals have become bolder, causing injuries and property damage that result in millions of dollars of claims annually. Rather than dropping the merchandise when confronted, the shoplifter will use any means possible to get away with the loot, using weapons like Mace guns, Tasers, and knives to assault store associates.

This increase in violence has forced retailers to re-examine how they mitigate and prevent such acts, tactically and strategically. Based on data from over 300 Gallagher Bassett retail clients, the cost of workers compensation claims related to violence has increased by 68 percent over the last five years, while non-violent claims rose six percent.

This statistic is a sobering reminder that, beyond the financial losses, human lives are affected by workplace violence. Retail risk managers have become aware that one shoplifting incident can turn into a workers compensation claim or a liability claim (with allegations of discrimination or false imprisonment), leading to a spike in their total cost of risk. It has become critical for retailers to analyze their programs and determine how shoplifting impacts costs. Retailers need to partner with their risk managers and loss control teams to navigate the difficult task of preventing shoplifting while protecting employees, customers, and inventory.

To Stop or Not to Stop?

Stopping a shoplifter is difficult. Beyond legal and safety considerations, retailers must reconcile their approach to customer service and sales with possible inventory loss resulting from shoplifting.

Some retail clients have implemented a “no stop” policy—no worker will stop an offender when shoplifting. These organizations include specific language in their employee policies regarding zero tolerance, no chase, and no-touch engagement with suspects. Other retailers are implementing de-escalation policies to avoid injury by training employees on how to engage potential shoplifters. This approach is intended to help avoid claims of discrimination, while protecting the employee from assault or injury.

Employees should know and understand their employers’ policies and the consequences that could take place when interacting with shoplifters. Proper training can be particularly daunting during seasonal peaks, when workers are on-boarded quickly. Retailers should consider using posters in backrooms with key reminders of the policy, along with providing critical ongoing training.

Additionally, determine if a “no-stop” policy is right for your geographical exposure. A review of Gallagher Bassett’s book of business’ 2016-17 data shows that New York has seen violent workers compensation claims increase by 40 percent, followed by California at 24 percent. If you do implement a “no-stop” policy, it is important to continue to monitor shrink compared to claims cost to evaluate policy effectiveness.

Employing Technology

There are hundreds of websites with lists of the easiest stores from which to steal, along with tips on how to commit the crime. This has, in turn, led to repeat offenders targeting these stores. Technology, like facial recognition, is on the leading edge of the efforts used to try and combat this problem.

An August 2018 FaceFirst study acknowledges that repeat shoplifters are more organized and aggressive than previously known, striking the same retailers multiple times across several locations. The idea of bio-recognition in retail stores helps managers recognize known violent offenders so they can take action prior to the event, making employees and shoppers safer.

Everyone’s goals are aligned: to maximize profits by reducing losses related to workers compensation, liability claims, and other key loss drivers. As shoplifting becomes a more volatile incident, risk managers must utilize all experts in-house and externally in order to keep employees safe from these threats.

SIDEBAR

Taking Inventory
Consider the following when establishing a comprehensive view of your risk.

Analysis:

• Examine how violence from shoplifting is impacting your total cost of risk.

• Complete an analysis of anti-shoplifting models versus the brand/customer experience/risk, such as “no-stop” policies.

• Understand the impact of tortious claims (e.g. false imprisonment or false arrest).

• Research the benefits of technology (e.g. facial recognition).

Policy:

• Partner with loss control, legal, and human resources on development.

• Utilize sales and service by employees to prevent or deter shoplifting.

• Define who is authorized to make a stop/apprehension and under what circumstances, and ensure these individuals are aware of the associated risks.

• Address safety considerations in making a stop and in protecting fellow employees and customers.

Training:

• Provide ongoing company training for management staff, including seasonal employees.

• Ensure managers have the skills and the tools to bring that training back to the store.

• Initiate awareness programs, such as posters or other visual reminders.

• Refresh training on a regular basis with updated “lessons learned.”