Vertical Markets

Fashion Forum theft survey

by Mark Rowe

Fashion retailers appear more susceptible to theft – particularly staff dishonesty – than the rest of the high street. That is according to a new survey from the Retail Loss Prevention (LP) Fashion Forum.

The Forum, the most established of the eight ORIS LP Forums decided to measure crime in its own sector because their perception of losses seemed to out of sync with the industry norm, as recorded by other retail surveys.
The tough economic climate causing people to turn to dishonesty is among findings from the survey, carried out by an independent survey company on behalf of a representative sample of the forum.

The findings suggest that although customer theft was in decline and largely in line with other surveys, internal theft was more than 30 per cent of all fashion theft, whereas it represented single-digit per cent of the rest of the high street, according to the British Retail Consortium (BRC) crime survey.

Mitch Haynes, the chair of the Forum, said: “Over recent years there have been a number of retail crime reports ranging from the BRC’s annual survey to the Global Retail Theft Barometer and the Retail Fraud Survey. We felt that these reports measured different indices and in many instances did not reflect the true nature of the loss landscape in the fashion retail industry. This was particularly illustrated by the different measures on internal theft – one year representing seven per cent of overall losses, according to one survey, while another put the figure closure to 40 per cent for the same period.”

Haynes is heads of security for Aurora Fashions, the company behind brands including Karen Millen, Coast and Warehouse. Using the retail security contractor Cardinal Group’s system and analysis from Cap Index, a more compact survey was carried out to probe specific stock loss, police response to crime reports, the investment and deployment of LP staff, technology (EAS tagging, CCTV), restitution (civil recovery) and so-called whistle blowing services.

According to the survey, overall the losses came down to an average of 1.41 per cent of sales compared to two years ago when the figure was at 1.46pc. The Fashion Forum members’ interpretation of this decrease is reflective of the whole of the high street – when foot fall is sluggish and sales are down, businesses put more focus on protecting the bottom line i.e. the reduction of stock loss through better LP technology and improved systems for stock file accuracy.

Findings for stock loss causes:

The 1.41pc figure  is in line with Global Retail Theft Barometer for 2012, but out of kilter with the BRC’s figures  (BRC 2012 reveals a bigger fall – 1.21pc compared to 1.55pc in 2011)

The Fashion Forum figure highlights the fact that external theft remains the biggest issue for retailers:

·         Store theft by customers at 45.5pc means external threat is still the biggest risk
·         Deterrence is still the main focus, but a reduction in staffing levels driven by the recession has had an impact
·         Fashion retailers are also witnessing an increase in employee theft – an average of 32.3 per cent of loss is attributed to internal theft, which is no longer ‘the elephant in the room’ and is a key focus for shrinkage reduction. The last Global Theft Barometer suggested that internal theft was at 35pc while, by contrast, the BRC reported employee dishonesty was just 4pc.

Some 65 per cent of those surveyed reported an increase in internal theft

Data mining has enabled retailers to identify and report true figures on internal theft

Companies  are careful of brand damage and don’t always want to ‘publicise’ internal theft issues by going to the police

More than one third of employees involved in internal theft were in a position of trust.  The higher their position, the more damage they can do

Some 18 pr cent of shrinkage was attributed to administrative error; and

LP departments are becoming more commercially-aware and are therefore focusing on other areas of loss such as administration and process error.

Haynes added: “It could be the case that the fashion industry is more susceptible, or it could equally be the fact that there is no consistent and robust measure of crime and some retailers measure and report crime in different ways. Ours was a representative and robust survey, the findings of which have chimed with other retailers in the space.”

Louise Henham, the facilitator of the ORIS Forums, added: “This was a very interesting exercise from the longest established of the Forums and helped crystalise thinking about working together to build a more accurate picture of loss across the retail landscape. All retailers want to work more closely with law enforcement but we cannot manage crime until we measure it accurately. This survey underlines that point and gives us a start point to move the debate forward.”

Other findings:

Stock Loss by product line:
Fragrance, Body care and footwear were a higher percentage to sales than others. Some explanations include:
Aggressive targeting by organised gangs
Increasing  ingenious ways of defeating merchandise projection strategies
Increase in pairs of shoes on display
Increase in the commercial push to display high value items openly
Why incidents are not reported to the police:
Low value items
Not company policy – deter rather than detect and detain
Too time-consuming
Fear of reprisals
Other challenges on police resource
Thieves still taking advantage of weak penalties for shoplifting.

Tagging of stock:
67 per cent tagged their stock
21pc source-tagged (at the point of manufacture). This is likely to increase going forward because it  adds operational efficiency
Near all (99pc) respondents think that EAS (tagging) is effective, but retailers and suppliers need to evolve in terms of methods of protection.

There are still product areas that remain a challenge to tag as it is still cost effective or aesthetically  acceptable.

Reasons for increased violence against staff:
Although actual violence against staff remained static, threats of violence and instances of verbal abuse had increased for more than 80 per cent of the companies involved in the survey – particularly toward staff with a security function.

The increase could be due to:

Companies having tightened up refund polices – a potential trigger point for verbal abuse that can escalate to violence
Greater levels reporting – companies have better reporting than two years ago
The introduction of conflict resolution training that can make staff members more aware of issue
Refund Fraud:
There is more external than internal refund fraud. On average there were 0.2 cases of internal fraud reported compared to 0.5 for external incidents

Credit card fraud and charge-backs:
The survey figures are low, but there is concern about an increase in fraud as non-chip and pin cards from other countries that are used in the UK where there is greater exposure to card fraud.

Civil recovery:

Seven companies use it for employees and shoplifters
There is likely to be more focus on civil recovery going forward, possibly in light of changing police priorities,  law enforcement response, and cost pressures.

CCTV

Some four in five (82 per cent) of companies use it and plan to increase in the next 12 months. There is greater asset-sweating as CCTV is used for other areas of the business such as marketing, insurance claims or litigation.

Whistle blowing

Most companies have hotlines, it but usage still remains very low
Retailers disappointed in the low level of reports and are collaborating to look at new and innovative ways to engage employees
There is an increasing willingness to turn a blind eye
There is a disconnect between reporting via whistle blowing and feeding back to the business

Crime Reduction Partnerships

Near all (99pc) of companies use them. More than half of the companies believe there are opportunities for a better return on investment.

Related News

Newsletter

Subscribe to our weekly newsletter to stay on top of security news and events.

© 2024 Professional Security Magazine. All rights reserved.

Website by MSEC Marketing