MAKING THIEVES THINK TWICE

When it comes to theft, retailers are fighting a two-front war: against shoppers and against employees. Fortunately, new advances in technology like surveillance systems and cashier-monitoring software are helping retailers keep pace on both fronts.The latest closed-circuit television (CCTV) surveillance cameras, for example, are creating a stronger deterrent to stealing from stores or distribution

When it comes to theft, retailers are fighting a two-front war: against shoppers and against employees. Fortunately, new advances in technology like surveillance systems and cashier-monitoring software are helping retailers keep pace on both fronts.

The latest closed-circuit television (CCTV) surveillance cameras, for example, are creating a stronger deterrent to stealing from stores or distribution centers.

Hy-Vee, West Des Moines, Iowa, which operates 222 supermarkets in the Midwest, uses Clarity Advanced Public View (APV), a CCTV system made by Checkpoint Systems, Thorofare, N.J., in nearly two-thirds of its stores.

In each store, 20-inch, high-resolution color LCD screens with integrated cameras are installed in high traffic sections. The screens are small, but capture a sharp image of anyone within the camera's field of view. Hy-Vee initially invested in the system six months ago.

"It gives us an idea of who's coming into our store," said Tim Hopson, assistant director of safety and security, Hy-Vee. "If we ever have any crime in our store, we can go back and get a good view of the person who caused the problem."

Hy-Vee has found Clarity APV to be easy to install and its small screens non-intrusive, said Hopson. Although it's too early to collect numeric data to prove the system is working, several of the higher-volume stores are seeing fewer shoplifting incidents, he noted.

"We feel it's a great deterrent. So if anyone comes into the store thinking about causing a problem, they know they're going to be on tape," he said. "It just gives the presence of security. It makes them think twice." Aside from helping to deter crime, Hopson said the Clarity APV system has helped track customer and employee injury complaints, and allowed the store to identify people who write invalid checks.

Another CCTV product, Smart Track, marketed by Ronkonkoma, N.Y.-based-Sentry Technology, helps retailers like Food Lion, Winn-Dixie and Europe's Metro AG keep watch over their stores, focusing on preprogrammed areas of the store during high-theft hours. Instead of openly displaying monitors, however, Smart Track is a two-camera unit hidden in an aluminum rail attached to the ceiling.

Sensing Patterns

On the employee side of the equation, retailers are finding increasingly sophisticated software that can sense irregular patterns by cashiers, such as sweethearting, at the point of sale.

For example, Albertsons, Boise, Idaho, has been using ShrinkTrax, from Trax Retail Solutions, based in Scottsdale, Ariz., at the POS, where it previously had no other tracking system in place, according to Frank Seil, manager of store control and training at Albertsons.

"This product fit our needs better than anything else that we were seeing out there," he said. "We felt a key component of it was the coaching at store level."

Training employees and installing the system took some time and effort because of the large number of stores -- about 2,500 -- operated by Albertsons, Seil said. "There was a long start-up, with getting the data through the system so it could be evaluated. Then the training process was fairly lengthy."

Thus, it took more than one year for the system to be implemented in all stores. The process is ongoing because of turnover. Since then, ShrinkTrax has performed up to expectations, Seil said, and the product keeps Albertsons "on par with everybody in the industry."

Another application, NaviStor, from Retail Expert, Woburn, Mass., monitors the POS at retailers like Bashas', Food Lion, Penn Traffic and K-VA-T Food Stores.

Penn Traffic, Syracuse, N.Y., chose to invest in NaviStor late last year. The company is now implementing the system in all of its 112 stores. "The primary reason for this product was to improve overall profitability. So far, it's been a very effective tool in analyzing all the exception data on the front end," said Steve Middleton, manager of asset protection and governmental compliance, Penn Traffic.

Currently, Penn Traffic's store managers are learning the system and becoming acquainted with the data it supplies. With NaviStor, the cashier is under surveillance, but Middleton sees the system not only as an employee watchdog, but also as an overall benefit for the store.

"It identifies possible theft indicators, as well as training and performance issues," Middleton said. "It also makes business trend information available in its reports."

K-VA-T Food Stores, which operates the Food City banner, also used a manual in-house POS monitoring system until October 2003, when it began testing NaviStor at select stores in Kentucky, Virginia and Tennessee. Since then, the system has been added to all of the company's 90 stores and is performing up to expectations, according to Joe Fryar, director of security and loss prevention at K-VA-T.

K-VA-T, Abingdon, Va., has been able to personalize the system to meet its needs, as well as synchronize it with the store's digital CCTV. "This system takes more time on the initial set-up, but you get to decide what you want out of it," said Fryar.

K-VA-T's goals for the system were to help cut the stores' overall shrink, and reduce the number of manually keyed items at the POS. So far, Fryar said NaviStor has helped limit sweethearting and detected a glitch in the meat department that was causing defective labels, which required manual entry at the POS.

Although the system is used to track employee performance, the company does not try to catch employees unwarned. "We're very open with what we do," Fryar said.

"It's no big secret. Even in our orientation videos we mention that we use a POS exception reporting system. We show our CCTV in orientations. We think they ought to know that we're monitoring."

Besides detecting fraudulent transactions and sweethearting, NaviStor also tracks pharmacy data and can sense when a pharmacist is writing additional prescriptions, or distributing an abnormally high number of drugs.

Trax and Retail Expert have linked their software to CCTV systems. Suspicious trends detected by the software can be further evaluated with video evidence.

"You can watch the video and find out why the cashier missed the lobster, or why does this cashier never sell lobster," said Bud Adrion, executive vice president, Retail Expert.

Looking Out for BOB

At the checkout, as elsewhere, out of sight usually means out of mind. For products lodged at the bottom of the basket -- the BOB -- this can mean out the door with no payment made.

An average-size supermarket loses $10 per lane per day from objects leaving the store under the basket unpaid for, causing a loss of $30,000 to $50,000 per year, according to Evolution Robotics, Pasadena, Calif.

Evolution Robotics is the latest company to propose a technology-based solution to this problem. For the past 10 months, the company has worked to create a system called LaneHawk to address BOB detection, at the request of a retailer, whom it declined to name.

"A very, very well-known tier-one grocer came to us and said, 'Hey, we're losing at least $150 million a year in potential revenue because of items leaving the store on the bottom of the basket unpaid for,"' said Michael McWilliams, vice president of sales and retail, Evolution Robotics. He said his company is in "various stages with several very well-known retailers" and is expecting to add four to eight more pilot agreements during the next few months.

Evolution Robotics said LaneHawk differs from similar systems in that it not only detects that something is at the bottom of the basket, but it also can tell the cashier exactly what that product is. The company declined to disclose the cost of LaneHawk.

Cracking Down on ORT

Besides petty shoplifters and dishonest employees, retailers have another class of thieves to worry about -- those engaged in organized retail theft (ORT).

ORT is theft from retail stores by professional shoplifters, according to the Food Marketing Institute, Washington. These shoplifters operate under strict guidelines and work for criminal organizations. After a product is stolen, it is usually repackaged and sold to illegitimate wholesalers and flea market vendors.

Web sites like eBay have inadvertently created a whole new marketplace for the selling of stolen goods. "[Criminals] can basically launder these goods to legitimate citizens around the world that are looking for a deal," said Rick Whidden, director of loss prevention at Safeway's offices in Portland, Ore.

The retail community is taking new steps to deal with this problem. Besides hiring highly trained corporate investigators, retailers are hoping to convince the courts that many supermarket theft incidents are not just shoplifting cases, but true organized crime. In addition, large retailers, FMI, the National Retail Federation and the FBI are trying to pass new legislation that increases punishment for those involved with organized crime in retail stores.

Last month, Chris Nelson, director of assets protection for Target, Minneapolis, addressed the House Judiciary Crime, Terrorism and Homeland Security Subcommittee on organized retail theft. He called on Congress to pass legislation making organized retail theft a federal crime, pointing out that state shoplifting laws often treat such crimes as a petty misdemeanor.

NRF is creating a Retail Loss Prevention Intelligence Network Database to help retailers and law enforcement share ORT information. Last year, NRF and the FBI formed the NRF/FBI Intelligence Network to share information and target ORT groups. FMI has devoted a section of its Web site to ORT: www.fmi.org/loss/ORT.