Display Theft: Shrinking Packages Affect Shrink

Small items -- some high-tech (portable GPS), some with a high street value (baby formula) -- are what retailers safeguard from thieves. It's been that way for decades. What has changed is these desirable goods are getting smaller and, thus, easier to steal. One technological trend is shoppers want slimmer cell phones and miniscule cameras. One social trend is eco-friendly practices that minimize packaging to the point going green could cost you green.Allen Buchholz, executive vice president of sales at Frank Mayer & Associates Inc., a Grafton, Wis.-based P-O-P display producer, says although both thwarting theft and going green are necessary, they kind of work against each other. "Right now, tiny memory cards come in huge packaging, which makes them harder to conceal and steal."Karen Michaels, merchandising manager, Garmin International, Olathe, Kan., says its packages are only six or seven inches big, so they get locked up or packaged in large clamshells if on the floor. She adds that small packaging doesn't just benefit the environment. "It's also that our products are manufactured in Taiwan so we get economies for freight by downsizing the package." Buchholz anticipates a continued push to minimize packaging, escalating the challenge of preventing retail theft. However, he says technology has come a long way in his 41 years at Frank Mayer. Retailers have increasingly advanced technology to fight shoplifting. Pilfer-proofing devices have taken such a significant leap forward that not only are they thwarting thieves but also collecting valuable data that can help retailers optimize merchandising to increase sales.At GlobalShop 2009, held in March in Las Vegas, the Hillsboro, Ore.-based merchandising firm MTI, which specializes in consumer electronics, demonstrated security systems with integrated computers to collect information such as how many times customers pick up a tethered portable GPS system and other data that helps gauge a display's popularity. Buchholz was duly impressed. "They've taken what's been around for 10 years -- a retractable cord, a puck and an alarm -- but they've added clever marketing tools."MTI's loss-prevention systems with integrated merchandising technology can also sense when a product has been picked up, which activates a video touting the product's features. And the software can also detect whether the customer actually watches the video, and for how long, says Jason Goldberg, vice president of marketing.Michaels says the problem of theft hasn't grown, but Garmin has gotten smarter. At consumer electronics stores, GPS devices are tethered in an in-line system so shoppers can test product. In other stores such as clubs, Garmin rolled out a counter display with a dummy unit attached to the front, protected by an acrylic, heat-sealed cover that is bent in the back for extra protection. "They would have to steal the whole piece or break that piece, which is pretty near impossible." The Price of ProtectionThese days, cell phones, PDAs, digital cameras, memory cards, video games, mp3 players and other small electronic devices tend to be vulnerable items that require a higher investment in display design. Just hooking up alarms to tethered products jacks up a display's overall cost by as much as five to 10 times, says John Naill, vice president of national account development, DNI Retail Design, St. Charles, Ill. And alarms can be overly touchy. When used with tethers to secure "live" cell phones (as opposed to "dummy" handsets), they at first had a tendency to sound off for no reason, to the point where the alarms were being ignored. Newer alarms tend not to "cry wolf."Dummy phones pose problems, as well -- perhaps because they're too convincing. "They look and feel exactly like real ones," Naill says, "except they have no circuitry in them. People were stealing those things like crazy. At $25 a piece, it gets expensive."Garmin writes copy on displays warning potential thieves that dummy products are attached. "When they try to rip them off, they damage the display," Michaels says. "Then we have to send more than just a replacement dummy unit, and store personnel aren't very adept at attaching new dummy or demo units so we have to do the labor."SurveillanceNorthern Tool + Equipment, headquartered in Burnsville, Minn., recently opened a prototype store in suburban Minneapolis built squarely on the "try before you buy" concept. Pricey hand and power tools are accessible to customers, who can test them in real-life applications at workbenches and endcap displays. As a safeguard, big-ticket items are secured with tethers and further protected with Electronic Article Surveillance (EAS) tags, which trigger alarms at store exits if not deactivated by a cashier, says Eric Randa, director of loss prevention.Northern Tool + Equipment stores also have security cameras throughout the store that not only monitor for shoplifting but also collect data, including customer traffic counts as compared with sales transactions, which helps measure the success of merchandising.Although supermarkets generally sell neither big-ticket nor high-tech merchandise, they are particularly vulnerable to shoplifters because their profit margin is so small. Shoplifters tend to swipe commodities such as baby formula, analgesics, pregnancy tests and teeth-whitening strips. A major threat is organized retail theft, says Mark Gaudette, director of loss prevention for the supermarket chain Big Y, headquartered in Springfield, Mass. "Kids stealing candy bars -- that's not the problem," he says.To prevent pros, or their down-on-their-luck hirelings, from snatching the entire stock of baby formula, Big Y merchandises formula in click racks, which allow customers to remove only one container at a time, and each removal causes an attention-drawing clicking sound. However, supermarkets' and mass merchants' biggest threat is theft from their own employees. According to the 2007 National Retail Security Survey, 44.5% of the $34.3 billion worth of retail theft is committed by employees, compared to 34.5% by shoplifters, which means employee theft at retail stores is nearly 30% more prevalent. (See sidebar for more on employee theft.)Looking forward, MTI's Goldberg predicts that loss-prevention systems will soon go wireless, likely with the aid of RFID tagging. Products won't be tethered or otherwise physically secured, he says, but customers will only be allowed to handle them in proximity to a display. If they take a product out of bounds, an alarm will sound.

Display Theft: Shrinking Packages Affect Shrink

P2PI MEMBERS

JOIN P2PI

Related Topics

Related Images

Business Topic

Market Segment