Theft and the modern store

On June 23, 2013, a man stole 18 semi-automatic handguns, worth approximately $14,000, out of a display case at Stewart's Ace Hardware in Roosevelt, Utah.

Incidents like this seem unusual, except when they aren't. Hardware stores are targeted as much for their resalable items as any other retail establishment, and such activity appears to be on the rise.

According to the "25th Annual Retail Theft Survey" by Jack L. Hayes International, 23 major participating retailers apprehended 1.1 million shoplifters and dishonest employees in 2012, an annual increase of 7.4% and 5.5%, respectively. That means more than $189 million in recovered dollars, up 29.7% overall (retail losses amount to $37.1 billion each year). Mark R. Doyle, president of JLH, said these increases are on par with similar gains reported in previous years — apprehension recovery dollars have been on the up for the past 11 years, and non-apprehension recovery dollars have increased for the past 16 consecutive years (25.2% in 2012 alone).

Though this can be partially attributed to higher rates of theft in general (organized retail crime, for example, has tripled in prevalence over the past decade), store owners seem to agree that technology is helping them work smarter in this regard.

Bob Mulder, manager of McGuckin Hardware in Boulder, Co., said that he experiences less theft in his store than he did 15 years ago, when there were well over 200 apprehensions a year. These days, those numbers are hovering, between 120 and 150, which he attributes to smarter displays, better customer service, security cameras and computerized systems that help him pinpoint and clamp down on specific trouble spots. A full-time loss prevention staff doesn't hurt either, as well as keyed electronic access to help curb employee theft.

Curt Bates, store manager of Price True Value Hardware in Atlanta, Texas, is quick to agree that technology helps a lot. His 32 security cameras allow him to zero in on license plates, among many other things. Customer service, attentiveness to trends, and checks and balances with regard to employee oversight are all cited as well, not to mention stricter laws that help him prosecute shoplifters.

Rick Karp, president of Cole Hardware in San Francisco, has a Sensormatic system that takes things one step further with antitheft labels on certain items and an integrated POS system.

The most effective loss prevention strategy is arguably that of Joe McLaughlin, owner of Grumpy Joe's in Big Bear City, Calif. Being a retired cop and the sole employee of his small, manageable store has ultimately served him well — to the tune of zero loss. Note to others: A 600-sq.-ft. store in a small community is difficult to rob. But even McLaughlin gets by with a little help from his security system: His cameras are wired to a feed that goes directly to his cellphone, making him well-equipped to provide a picture, video and detailed description in the event of a theft. Overall, he says that the ability to provide these crucial details right away is what's helping companies apprehend thieves quicker.

Shoplifting in general is estimated to account for 30% to 40% of total retail shrink, according to a University of Florida and Hayes International study. On average, employees steal about 5.5 times that of shoplifters, but Mulder, McLaughlin and Bates all cited non-employee theft as a more prevalent issue.

To be fair, it's a non-issue for McLaughlin; Mulder gets rid of "hiding spots" via the use of trash compactors and baled boxes; Bates has a "mature workforce," where the average age is over 40. Karp, who faces the added challenges of running a store in a dense urban area, figures these kinds of losses into his costs and has a manager on duty to ring up employee purchases.

"We try to maintain an atmosphere where we trust everyone, knowing full well that we can't," he said. "It does happen, but we don't want an environment where [employees] are shaken down at the end of the day."

It should be said that while technology has made store owners faster on their toes in either regard, prevention strategies appear to remain the most important tool in one's belt. For every $1.00 that was recovered in 2012, $25.00 was lost. That means only 4% of retail theft loss results in a recovery.

In order to buck this trend more completely, hardware stores will have to continue leveraging the latest retail innovations, but perhaps more importantly, they'll have to mind the unique issues that hardware stores face.

"Hardware stores have a lot of little pieces — whereas a clothing store sells [bulkier items]," said Bates. "I'm always amazed at what people steal. Most of the time it's not worth stealing — they're items that cost less than $2. But all those little pieces add up, and it affects your gross margin."

Indeed, it's the little odds and ends — screwdriver and router bits, nuts and bolts, locks, fishing flies, lures and other easy-to-conceal items — that hardware store owners tend to put up front in a high-visibility area, at times in a glass display case for especially high-cost items.

"Someone once walked out with a generator, but that's pretty rare," Mulder said.

Additionally, many products sold at hardware stores have street value, making them an especially lucrative target for organized retail crime.

But opportunists come in all shapes and sizes, and thwarting them can be as simple as narrowing their options.

"It doesn't matter if it's Scotch tape or a hammer or a plant — if they can steal it, they will," Karp said. "I've caught mothers putting things in baby carriages; even the grandpa of an employee [was apprehended]."

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