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So What’s in Santa’s Bag?

December 1, 2007
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What is your Santa doing? Temporary hires are a security problem for loss prevention directors during the holidays. While there are losses from shoplifting, studies show employees and temps can do more damage.


What’s that sound? Could it be the jingle of sleigh bells? The happy prancing of reindeer on the roof?

More likely, it’s the sound of cash jingling in customers’ pockets as they eagerly storm their favorite stores during the holiday shopping rush. Retailers deck the halls and roll out the red carpet to welcome fourth-quarter sales and profits, as they well should. According to the National Retail Federation, a majority of retailers earn anywhere from 25 to 40 percent of their annual sales in the months of November and December.

But what, in the midst of the hustle and bustle of the holiday season, are they doing to protect these earnings? With higher customer traffic levels, longer store hours, more cash on hand and an increased number of seasonal employees, retailers are at an increased risk for shrink. If they’re not careful, a greater slice of their profits could line the Grinch’s pockets.

As retailers fight for market share during a competitive shopping season, they must be just as motivated to protect profits as they are to earn them. ‘Tis the season for proactive, ramped-up loss prevention programs – the most effective way to keep your profits in-house, just where they belong.

Though all retail theft is an issue during the holiday shopping season, retailers are particularly at an increased risk of internal and external theft, refund and gift card fraud and increasing organized retail crime. That’s a long list – and it means that simply apprehending these Scrooges isn’t enough, particularly if they’re coming from inside the organization. In fact, employee theft accounts for almost half of a retailer’s shrinkage. Successful, shrink-minimizing loss prevention programs are proactive and begin well before the holiday rush.

SHORT-TERM HIRES VS. LONG-TERM LP GOALS

With nearly 600,000 temporary employees expected to be hired during this year’s holiday season, smart hiring decisions are a must.

Even temporary employees should undergo a qualified pre-employment screening process including background checks. Once hired, an investment in training and education can go a long way in preventing shrink. If full-length training programs aren’t feasible, some type of condensed educational program should be in place to ensure that profits aren’t lost to preventable transactional or processing errors.

To increase employee loyalty – and hopefully integrity – retailers should create incentive programs for seasonal workers. Offering an opportunity for full-time employment is an option that can benefit both the employee and the retailer in the long run.

RAMPING UP LOSS PREVENTION RESERVES

Another challenge that retailers face is the opening of temporary storefronts or stand-alone kiosks to meet increased customer demands. These additional locations become an extra burden on already stretched loss prevention teams and their resources; and maintaining visibility within each store is a challenge. With minimal coverage for each location and customer traffic approaching on all four sides, shopping center kiosks are especially vulnerable to theft.

Hiring new members onto a loss prevention team may not be a viable solution to this situation because after the holidays, sales will slow and temporary locations will close their doors. At the same time, cutting corners on loss prevention best practices can damage long-term programs that spend the rest of the year gaining momentum. How can retailers manage this influx in necessary LP coverage without straining their resources or burning bridges with loyal employees?

Retail loss prevention solution providers can offer retailers LP relief during the fourth quarter on a nationwide level. Outsourcing LP programs like auditing, investigation, exception-based reporting and mystery shopping during the holiday season can support a retailer’s overall compliance goals and standards while managing shrink levels. Some LP providers offer these programs on an immediate need basis and will work with retailers temporarily through the holidays to help maximize sales’ impact on their bottom line.

These days, retailers often, during the holidays and special events, open temporary storefronts or stand-alone kiosks to meet increased customer demands. These additional locations become an extra security burden, according to Steven May.

WARDING OFF EXTERNAL THEFT

Offering great customer service should be at the top of every retailer’s wish list all year long, but it gains even more importance during the busy holidays. Engaging in proactive customer service remains the greatest deterrent for all types of external theft and shouldn’t be overlooked. An employee’s understanding of how to help customers and manage their requests goes hand-in-hand with a retailer’s commitment to training and ongoing education of policies and procedures.

When it comes to loss prevention, there are no shortcuts, especially when sales are high and merchandise is moving. Retailers need to maintain consistency with their programs, despite the holiday madness. The planning process and making the best use of resources become key for loss prevention needs. Plan ahead, ramp up programs to match sales volume and don’t take hiring or loss prevention shortcuts. Chances are, you’ll be getting what every retailer wants for the holidays – increased profits and overall business growth.

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