Below is the complete transcript of the interview completed in October 2022 with Mike Keenan, a retail industry security expert, and a member of the TAL Global Team.
Our guest is Mike Keenan, a team member with TAL Global. And today, our focus is on internal and external retail theft, a concern for retailers which tends to increase during the holiday season.
Before we start, Mike, please tell us a little about yourself and your connection to the retail industry.
Of course, Robert. I was in the [security] industry for over 35 years. I started my career with the FBI and then moved into the private sector after about four years with that organization and ended up working in Macy’s, Ross, Mervyn’s, Longs Drugs, and Gap during my career. So, I have a lot of experience dealing with internal and external theft in a retail environment.
Thank you, Mike. About an hour ago, before our call, you sent me a report from the National Retail Federation about security issues in the retail sector. I went through that study, and I would like to highlight some of the key facts in that study for our viewers. It says, and I am going to read this:
- The COVID-19 pandemic continues to reveal unforeseen impacts in all kinds of industry sectors.
- One growing concern is retail shrink, known as retail theft, which is now a 100-billion-dollar problem in the United States.
- The study found that the average shrink rate in 2021 was 1.4%. That’s the same as in the last few years, but it says it’s about $5 billion more now than in 2021.
- It also says that retail shrink encompasses many types of loss. It is primarily driven by external theft, including theft attributed to organized crime.
- Further, retailers saw a 26.5% increase in organized crime incidents in 2021. Eight in ten retailers surveyed report that violence and aggression are also associated with organized crime incidents.
- The study concludes by saying things usually get worse during the holiday season.
Now, I have a question about this study. What does it mean when it says organized crime? Is that the mafia?
Well, organized retail crime is not the mafia. Still, it operates in a highly organized way, and it differentiates itself from your casual opportunistic shoplifter because these people plan it out. They have teams, and they have equipment. They can sell the product that they steal. So, it is a concerted effort by many groups focusing on all types of merchandise within retailers.
But when they strike a retailer, the retailer takes a big hit because the amount of theft in organized retail crime is much higher than the regular shoplifter. So, it is a high priority for all retailers. These organized crime groups, I mean, this is their business to steal from retailers. So that’s why it’s such a big concern.
Thank you, Mike. I jotted down three questions I’d like to ask you. The first one is: as we enter the holiday season, what should retailers be focused on regarding loss prevention?
Well, first, Robert, I would focus on the safety of both employees and customers. It should be a retailer’s top priority all year, but especially during this time of the year because customer traffic increases and there are more store employees due to seasonal hiring. So, as a result, a retailer must make safety a priority because an incident of violence in a store could cause a loss of sales.
It could also cause the employees to want to avoid working there. So, a retailer must review all of their policies and their strategies for safety with their employees going into the holiday season, so they know what to do if they’re confronted with an angry customer or they are experiencing an organized retail crime theft.
We’ve recently also heard a lot about active shooters, and many of those incidents occur in malls and retail stores. It is critical to prepare your employees for what they may face due to these incidents. It’s crucial because their safety is a high priority. Preparation is the best defense.
Mike, what can retailers do to protect themselves from theft? I guess we’re talking about some more technical things. What do you suggest?
Well, as you mentioned, there are two principal areas: internal and external theft. The media has brought ORC (organized crime) to the forefront. And the study indicated that external theft is a significant factor.
All retailers need to have strategies in place to deter external theft, and that includes technology. It’s essential to ensure that you have equipment like CCTV and deterrent devices like EAS (electronic article surveillance) where you’re putting tags on the product, locking things up, and securing your high-value product.
It’s challenging to stop these organized retail gangs because they come in with a purpose and often even with tools to defeat that technology. But it is essential to understand that there are many technologies out there that can deal with external theft. Retailers need to explore those and pick the ones tailored to their business model because the business model should determine the protective strategies [used].
Mike, my next question deals with internal theft, but I wanted to share a story with you before I ask you the question.
In the late 1990s, I sold one of my businesses and decided not to work for a while. And I was living in Atlanta, Georgia, and there was a Lowe’s home improvement store about three blocks from where I lived. They were always looking for new people, so I decided I would go there and apply for a job. I got the job.
At the introduction, when all these new people came to the store to meet the manager and get acquainted, all they did was talk about internal theft. They even showed us a video about how they watched the salespeople. They were so concerned about internal theft. It just amazed me.
So, what do you recommend to other retailers regarding reducing retail theft? What can they do about it?
Well, you told a great story there, Robert, because retailers do their best to be proactive and try to deter theft before it occurs. And in the current climate, as we discussed earlier, there is a tremendous focus on the external. But you want to remember internal because the employees inside the company have the keys to the store, which means they have access to cash, they have access to the high-value product because they’re being entrusted with it, and retailers have to do that.
What you saw in that training was how retailers are trying to deter stealing. The way to do that is to ensure that you have solid policies and procedures that control loss. When adhered to properly, those policies and procedures should have controls built in that will deter theft or alert you to the fact that it’s happening.
It starts with sound policies and procedures and then good training to ensure that the employees understand the policies and procedures and the consequences of not adhering to them. That is another essential thing.
Supervision is the best deterrent to internal theft. If you can have good supervision, you will deter your employees [from stealing]. And I learned this early in my career when I did a lot of employee interviews where employees had done something dishonest internally.
And one of the things that I noticed is they were very alert to what went on in their stores and they knew their supervisors. And retailers have multiple supervisors. Every hour the store is open, there are multiple supervisors.
Employees knew those supervisors who weren’t paying attention. It was during those times that employees would steal.
That shaped the foundation for me to build a strong loss prevention supervisor training program. So that we could use supervisors as an extension of loss prevention to help deter loss. But there’s another benefit to that, Robert, and that is when you have good supervision, you also improve productivity within your company, and you’ll see your sales go up as well.
Are stores increasing the supervision of the staff?
You know, it’s a great question. Every retailer has its business model. And unfortunately, due to the challenges of the pandemic and staffing and the labor shortage, it is frequently difficult to get enough people to supervise appropriately. So, they’re not adding supervisors. It’s taking your supervisors and empowering them to create a presence where employees will not only be more productive, which is good for the business but will be less likely to steal.
Technology plays a role here, too, because a good supervisor can use closed-circuit TV and camera systems to monitor their employees even when they’re not working. And again, you don’t want to be Big Brother, or have Big Brother watching you. Still, at the same time, by creating an extension of your leadership through technology, you can maintain that productivity and deter extra internal theft even when you’re not there.
Mike, I’m concerned about this year because the stores need sales, but they don’t have the people. And it’s a difficult situation. We’ll have to see how this holiday season works out.
Yes. The most important thing, Robert, is that retail needs to be proactive, have a strategy, and execute that strategy to maximize its profitability by reducing loss.
Mike, it’s excellent information. Thank you so much.
For more information on this topic or to schedule an interview, please contact me at email@example.com