With any ongoing business enterprise, there are always going to be challenges in developing and retaining talent that manage and service the customers of the business. Some would argue that the single most important component of a successful business operation is that the entire team is pulling in the same direction and, above all, protecting the brand that provides their income. The hardest thing I encountered as a loss prevention director was realizing that our guard had to be constantly maintained, during customer transactions and particularly during audits.
In the case of Pawn and Loan, there are some particular employee concerns that should be pointed out. The important thing to remember is that a pawn store employee’s normal routine involves acting as a retail sales clerk, conducting value appraisals on a wide assortment of items and being a character judge and effective loan officer. While this multitasking can be applauded for these folks, it also offers its share of risk to the organization.
In my years of managing audit protocols in pawn shops, including over 1,000 shops spread out globally for a national brand, we found some very specific and equally difficult crimes to detect against our brand. I identified the most frequent and least detectable shrink issues that we were challenged with below
Folks say that the pawn industry is financially fluid and highly profitable because of the inflated interest we realize on fully collateralized loans. The truth that they do not know is there is a calculated amount of shrink (or loss) that is calculated in to each store. How you or your audit manager monitors the mysterious ways store clerks take hard earned value from your organization can be the single most important operational process you have. I urge you all to take nothing for granted when it comes to ways your profits can drift away. The devil is always in the details.
One of my favorite quotes from Albert Einstein is “a problem cannot be solved on the same level of consciousness that created it.” This keen observation allows us to consider different perspectives in the loss prevention industry, especially when confronted with a client’s confusion over unexplained reduction of revenue, profits, or inventory. Often times, the client is totally frustrated by repeated attempts to solve the issue, only to find that the perpetrators have circumvented their prescribed solution. In other words, to be effective, we need to understand the level of consciousness in which the problem was created in order to design sustainable solutions. A deeper and more systemic challenge is usually where we begin to turn the trend of these issues.
A good example of this is when we are brought in to solve an “shrink” problem or identify activities that support internal loss, whether from single employees or employees in collaboration with outside customers or vendors. It is usually the first option to install procedures that are designed to apply control right where the leak(s) may be occurring. The disappointment is felt when the stakeholders realize they have not elevated their consciousness to adequately support the process changes and truly install the fix, rather they have just treated the symptoms of the problem. Soon the losses start adding up again
Before we can expect any new device or process to have any impact on internal crime, we must consider the view of the enterprise’s culture from the employees, vendors and customers. Culture is not something that can be directly created. It is a by-product of something more powerful, the emotional ownership of those who are tied to protect and defend the brand. To expect any process or procedural change to have an impact on the level of internal theft, a sense of honor to the autonomy of the employees and those of their fellow teammates is required. Nefarious minds will find ways to take what they believe they are entitled to. It is our experience that creating a sustainable culture of honesty at the talent vetting process, followed by reinforcement through process, training, and recognition, will make bad behavior the exception to the rule and begin to establish a culture of honesty.
Pre-screening employees as to their past criminal acts or even looking in to their credit history is only the beginning. We recommend administering some simple test prior to the initial interview to first determine if they possess the behavioral tendencies to fit the position. This allows alignment for the employee so they can reach their optimum feeling of value to the team sooner rather than later. The culture of honesty you seek has its foundation in employees feeling valued and a sense of belonging.
As in most cases, getting the right solution offers no quick path to cure. The losses you are experiencing probably did not start occurring overnight; hence, they will not be fixed overnight. Change your consciousness of what brought you the challenges in the first place, and you will find the solution not just more satisfying, but perhaps more sustainable throughout your business enterprise.
If you ask most people what the opposite of love is, they may tell you it is hate. As security professionals, it is encumbered upon us to understand the subtle difference that suggests the opposite of love is not hate, the opposite of love is indifference. Hate requires a similar level of passion as love; indifference is devoid of passion.
When planning a commercial security strategy, reminding ourselves that the target is indifferent towards our client is essential to preparing an effective security plan. The civilian perpetrator is only passionate towards compromising the security plan and gaining benefit for themselves, not winning an ideological war.
When it comes to defending an ideology or military opponent, it requires a very different philosophy simply because you are not dealing with indifference, rather an expressed hatred and passion for opposing flag or country. The opponent approaches the target with a passion to capture or destroy, for political reasons instead of reaping the rewards for their own gain.
In the commercial world, the criminal intent also never changes, regardless of the asset or industry we are protecting. It is most always a self-serving and borderline narcissistic soul(s), where in military or political scenarios the acts are normally selfless and sacrificial towards a greater goal. There is a reason the security defense industry is divided into separate worlds. Some specialize in criminal intent that is void of passion, some focuses on opponents that are entirely fueled by passion.
Criminal intent is at the forefront of any crime. When developing a strategy to secure assets in a state of rest or in transit, it is an important to have a healthy regard for what motivation the perpetrator may have. A balanced approach to planning how to make the criminal’ act harder to commit is essential in any effective commercial security plan.
Be safe and profitable
Imagine a retailer in your town...This retailer has a structural hierarchy just like yours. There are managers who oversee operations and train new employees. There are employees who obtain the product. There are employees who price, merchandise, and sell the product. There are even employees marketing the business in the community. Imagine this retailer was selling the same product as you. They are rapidly growing, attracting new customers and employees every day, have multiple locations, and most of their competition is completely unaware they even exist.
Now imagine this retailer is selling your product for fifty percent less than what you do, has an astronomical profit margin, and is generating more money than your business. Sounds pretty hard to compete with, right? Well, you’re probably breathing a sigh of relief that this is an imaginary scenario. But, it’s not. There’s probably a retailer just like this in your town that you didn’t even know existed. What’s worse is that product they are selling for so much less than you might have come directly from your store.
Who Are They?
They are organized retail crime (ORC), and they cost the retail industry 30 billion dollars a year. They are highly efficient groups who professionally shoplift, and then sell that stolen product out of flea markets, apartments, or online websites for significantly less than the retail price. While you may have heard the term ORC before, you probably have never heard them referred to as a retailer or business. But in every sense, that is just what they are. Think of them as having every characteristic of your business. Structure, training, employees, and bottom lines. They know their business as well as you know yours, and they are very good at it.
How Do They Operate?
The lifeblood of any ORC group is stolen merchandise. These organizations know what product is selling at what times and usually seek to exploit that. Typically, they will send a group of two to four individuals with a list of product, who will work for eight to ten hours a day shoplifting merchandise from various stores. They can typically hit ten to twenty stores a day for thousands of dollars each. Remember, these aren’t your typical shoplifters. They are specially trained to use group tactics and get the most merchandise in the least amount of time possible. It’s very possible for them to have hit your store and you not even know it. Remember, this is their profession, and they are skilled at it.
After the merchandise is stolen and sold, the money is used to pay the shoplifters, and to grow the group. Often these groups are using that cash for other ventures such as dealing in illegal drugs or stolen weapons.
How Do We Compare?
The key to protecting your business and beating organized retail crime is preparation, procedure, and communication. You want to make your business a hard target for these groups. The goal is to make them feel like their exposure is too high in your store so they go somewhere else. Here are a few tips to make that happen:
So, are you competing against organized retail crime?Well, yes, in reality we all are. It’s not a question of whether you have been affected by ORC, it’s a question of WHEN you will be affected. Remember, with proper preparation, procedures, and communication, we can win against organized retail crime.
As an employee or representative for your company, you are given the privilege and trust to oversee merchandise and transactions alike. This is a huge responsibility, and should be viewed as a show of faith by your company and managers.
It is important to be aware of external relationships with family and friends that can pressure you into breaching this trust. Poor judgement in this area can, and almost always will, cost you your job and may result in both criminal and civil charges. In these tough economic times, none of us can afford to be unemployed or have a record. It all starts with “the hook-up.”
So just what is “The Hook-Up”?
It starts at an early age and is almost ingrained in us. We want to help those closest to us. In high school, your first job may have been in the mall food court or a local restaurant. What was the harm in giving friends and family a few extra chicken nuggets or “hooking them up” with a free drink? When you would go to see your sibling or friend who works at the local clothing store, he or she would “hook you up” with their employee discount. You may have looked the other way when your friends came into your store to “shop” without paying for the merchandise. How many of us worked as store clerks and let our underage friends and relatives buy alcohol?
We all want to help our friends and loved ones, but we have to know where to draw the line. Each day businesses lose hard-working, quality employees because the employee misused the power given to him or her by the owner or store manager. Most didn’t think about the consequences of their actions, or didn’t realize the true harm in what they were doing.
Countless management teams have investigated and fired many good employees who have made decisions, without management or owner approval, to give “the hook-up” to family members and friends, believing that it is not harmful to the business. Many have significantly discounted merchandise for family members and friends or have looked the other way allowing friends to shoplift. Over time the employee begins to be used more and more by those they trusted the most and it is a difficult situation to stop, once started.
Bottom line: remove yourself from the situation. Tell those close to you that you can’t help them in your store, but your manager or coworker will do all they can, within company guidelines, to get them the merchandise they need. Let them know you value your job and for them not to put you in a situation that could lead to you losing your job or worse.
Your true friends and family will understand.
Security Tips – What to keep in mind when it’s cold out
It’s getting cold out there! This year, remember that cold weather requires more than coats and scarves, you’ll also need to be prepared for security risks that are unique to the cold weather.
Luckily, we’ve put together some tips to help ensure that your business operations run smoothly even as the temperatures decline.
Want more information on how to take care of potential risks in your business?
Email us at firstname.lastname@example.org and we’ll get your questions answered!
Be sure to share this article to help fellow managers and business owners get ready for the cold.
The holiday season is here! Of course, we all know this is the busiest time of the year for retailers. Unfortunately, as revenue increases over the season, so do losses! The hustle and bustle of holiday chaos is the perfect atmosphere for potential shoplifting.
Here’s what you can do to deter shoplifting in your store this holiday season:
Train your employees on frequent holiday transactions. Gift card purchases and sale discounts make for a more complex transaction, and these purchases are more common during the holidays. Train your employees on how to take care of these swiftly, so that they can spend less time distracted, and more time on the sales floor or speeding up the line.
Emphasize store organization and cleanliness. A messy store is more attractive to shoplifters, as it implies that there are not enough employees to pay attention to the sales floor
Stress customer service and engagement. Train employees to stay on the sales floor as often as they can. Engaging with customers, greeting customers as they enter, and being there to provide excellent customer service is one of the best ways to deter shoplifting. Shoplifters hate attention, which gives you the opportunity to spoil your customers while deterring sticky fingers.
Train employees to check the merchandise they ring up. Employees should check containers, packages, and other merchandise that could be used to conceal stolen items at the point of sale.
Train employees on proper procedures for handling shoplifting. Tell employees never to accuse, chase, or place their hands on a shoplifter. Additionally, let your employees know of any specific guidelines your company has for apprehending shoplifters.
Share this article on social media to spread the word! And let us know if you have any stories or other ideas on how to prevent shoplifting this holiday season.
Be safe, and be profitable.
Black Friday is one of the Biggest shopping days of the year. Unfortunately, while you’re excited for all of the great deals, criminals are excited for all of the distracted shoppers. Fortunately, there are a few things you can do to make yourself a less desirable target for criminals this black Friday:
Find a visible parking spot. Even if it takes a little longer, look for the best parking spot to deter break-ins. Look for a populated area that is well lit, and has maximum visibility.
Put down your cellphone. Criminals look for shoppers who are distracted – there an easier target. That’s why it’s important to stay alert and off your phone as you shop, and as you walk out to your car.
Make eye contact. If someone seems suspicious, it may be beneficial to make eye contact with them. This seems counter-intuitive, but making eye contact can deter a potential criminal from striking because they know they’ve been spotted. They will most likely look for an easier target, one that hasn’t had time to remember what they look like.
Store belongings out of sight. Keep your bags covered and in the trunk. This reduces the incentive a potential criminal has to break into your car. A break in poses a risk to a criminal (they may get caught), so if they can’t find a guaranteed reward through the window, it is likely they will move along or find a different target.
Use the buddy system. Just having a friend to shop with can lower your chances of being the victim of criminal activity. Criminals like an easy target, and since two are stronger than one, they’re less likely to strike.
Black Friday is notorious for criminal activity, and can be a very dangerous time of year. Make sure that you stay alert as you make your way through the crowds of shoppers this holiday.
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Did you catch the Newsletter from Loss Prevention Media: Will Seasonal Workers Cause Your Shrink Rates to Rise this Holiday Season?
If you’re in a pinch, we’ve highlighted our favorite parts directly from the article here; But we recommend you read the full article from their Newsletter too!
Less loyal workers are more likely to steal, making part-time seasonal hires a risk that needs attention.
Seasonal workers are, by definition, less attached to their employer. And workplace research shows that the less tenured employees are more likely to steal. Loss due to shrink grows right alongside the use of short-time and part-time employees.
Develop a set of standards investigating temporary hires
Limit the opportunity to steal
The Threat of Identity Theft – Protect Sensitive Information