Retailers combat shrink

According to the Global Retail Theft Barometer Results, the combination of crime and loss prevention costs the worldwide retail industry $108 billion annually (all figures in US dollars). This represents 1.36 percent of total sales.

Hardest-hit is the United States, where shrink adds up to $39.4 billion and 1.52 percent of retail sales. Japan is second on the victims list with $9.6 billion and 1.04 percent. In a smaller country such as Canada, retail shrink is still a huge $3.6 billion problem representing 1.49 percent.

Stop thief
No country is safe from the ravages of theft. Especially not with retail organized crime (ROC) expanding at an alarming rate. ROC (or retail organized theft, as it is called in Europe) operates worldwide, often in conjunction with other crime, including narcotics and human smuggling. For the retail sector, even if businesses just maintain their present security measures, shrink will increase. Preventative action is required.

There are solutions, including new technologies such as the electronic Logic locking system from Medeco High Security Locks, an ASSA ABLOY company. But it would be naive to think there is one magic formula. “I have been doing this for 27 years,” says Brendan Alexander, Director of Loss Prevention for the electronics retail chain Best Buy Canada, “and the most important thing that I would say is: There is no silver bullet in reducing your shrink. But the best thing is employee engagement.”

Across North America, Best Buy Co. Inc. is already best-in-class in reducing shrink to 0.40 percent, crucial in the electronics retail arena where profit margins are already slim. Best Buy Canada has intensified its employee training programs, boosted employee morale, empowered more employees with responsibility for loss prevention and linked them to the introduction of new security solutions. “We are selling cool technology,” Alexander says, “so we also want to utilize it and empower our teams within our stores. But the technology is only as good as the people using it. Technology is more effective if there is dedicated and motivated staff.”

Access cylinders
By the end of this year, Best Buy Canada, which operates both Best Buy and Future Shop stores, will be retrofitted with Medeco’s Logic. The system works with electro-mechanical cylinders containing miniaturized access control modules. The modules interact with electronic key cards allowing access to specific employees. They also provide managers carrying a master key with an instant electronic audit of all activities in that lock, including failed attempts, and the identity of the employee involved. Cylinders can be retrofitted in any brand and any type of existing locking hardware. Changes, such as rekeying when employees lose key cards or leave employment, can be done within minutes. Even the loss of a master key can be handled quickly, through a computer system, by changing codes and then walking through the store with the new master key to touch each cylinder.

Within three to four years, all 190 Best Buy and Future Shop stores in Canada will use the system. It is not just about security, Alexander says. “We were looking for ways to give out more keys to our staff and still have that measure of control that you get with high security locks.”

He calls a retrofit “a painless procedure” because Logic can be installed within hours, even when a store is open. As Medeco Canada’s Trish Holland says, “We can do it quickly, for substantially less money, because this is a self-contained electro-mechanical cylinder and there is no wiring needed and no need to rip out the frame to install the system.”  

Sales advantage
On the retail floor, Logic means store managers arm all sales staff with keys to instantly open locked display cases. That has boosted employee morale and also improved the efficiency of the stores because customers do not have to wait for a manager to show up to unlock cases holding expensive electronics. That means customers don’t grow impatient and leave, especially at peak periods.

“This innovation contributes to providing a fantastic customer experience,” Alexander says of the improved ability to serve customers. “It also gives us an opportunity to reinforce a key message to our employees: Look, we trust you! Here is a key and open up the showcase to better service that customer and become more productive and more efficient.”

At the same time — and Best Buy managers are transparent with employees — each key can be electronically audited, as well as each lock, by a simple touch of a master key. Joseph Kingma, Director of Business Management at Medeco’s head office in Roanoke, Virginia, says that Logic allows managers to implement or refine an existing behavior modification plan to handle shrink. “Employees suddenly know that, while they are completely empowered to open up locks they have never opened before, their manager can tell exactly where they have gone,” he says.

This plan can be implemented in collaboration with employees, not as a threat, Kingma says. One possible benefit could be better employee retention, as well as less employee theft and more employee participation in preventing shoplifting and even ROC, because vulnerable employees have sometimes collaborated with outside criminals.

“We are touching so many facets of a business,” says Kingma. “It’s more than just buying a lock and a key now. The potential is enormous. This is a game-changer for the retail industry. This product can help retailers handle shrink, security and employee issues quite differently than they ever have before.”

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