Loss prevention for dummies, and others

Employees and customers are becoming more adept at stealing, but hardware dealers can stem their losses by adopting a few best practices and keeping their security equipment in working order. This was the message from Joe Szvetitz, a loss prevention specialist with Risk Management Services, in his Aug.12 presentation, “Loss Prevention for Dummies,” at Orgill’s spring market in Chicago.

Szvetitz quoted statistics from a University of Florida study that pegged losses due to shrink in the hardware/LBM/garden center/home decor sector at 1.5% of sales. On average, 43% of these losses are attributed to employees.

Employee theft comes in many forms, from “sweethearting” merchandise to friends to pocketing cash. Using video images from CCTV, Szvetitz showed how the latter is often done, using methods like “shorting a deposit” and “working from an open cash drawer.”

While large retail chains routinely monitor their cashiers from remote locations, smaller operators don’t have the time to sit and watch video footage for hours on end. But hardware dealers can spot trouble early if they’re vigilant about daily cash balances for everyone who operates the register.

Szvetitz recommends a “blind balance”—making sure cashiers don’t know what their total sales should be at the end of their shift. Owners should be just as concerned about overages as shortages, Szvetitz added. If there’s too much cash in the till, “[Either] you’ve shorted a customer [or] you’ve gotten to the money before somebody else did.”

Although a daily reconciliation of cash and receipts for each cashier is standard operating procedure, Szvetitz also recommends the occasional “fake audit.” Basically, the store owner goes into the cash register and counts all the money at random times.

The most common method of stealing cash from store owners, according to Szvetitz, is fraudulent returns. It’s a major problem for retailers like The Home Depot and Lowe’s, which are frequently targeted by organized crime rings. But smaller independents are sometimes victimized by their own employees, who collect cash receipts that customers leave behind and then return merchandise through friends or family. Szvetitz had some simple tips to combat this type of theft.

“Any time there is a cash return in your business, make sure management is involved to approve it,” he said. Also, get a phone number with every cash return and then do spot checks. Call the customer to apologize about the unsatisfactory purchase—and also to confirm that the customer actually returned the item.

Every workplace needs a set of rules about who can ring up purchases for employees and their families (other than the employee) and what employees can carry out of the store at night.

But Szvetitz, a former Macy’s loss prevention officer who also holds a private investigator license, devoted part of the seminar to customer theft, which accounts for 36% of retail shrink, according to the University of Florida study. Szvetitz recommended surveillance cameras, with one “public view monitor” mounted in the store entrance.

“If you see yourself as soon as you walk into a store, it legitimizes the security of the business,” he said. “The bad guys realize you have a camera system, and it’s working.”

But far too often, Szvetitz said he finds CCTV systems that are out of order, an electronic article surveillance exit scanner that hasn’t been calibrated to detect anti-theft tags and emergency exit doors where the alarm has been silenced because no one thought to replace the battery. In addition to opening the door to more shoplifting, “it sends a bad message to your employees,” Szvetitz said.

Camera systems and electronic tracking aren’t the only preventive strategies. Using the low-tech method—an employee who greets shoppers and makes eye contact—really does work, according to Szvetitz.

“It’s a very friendly way to engage your customers,” he noted. “And those customers with ill will in their hearts will be put on the defensive. It sets the tone right away.”