19 minute read
ASK THE EXPERT
Supportive Coaching Reduces Shrink and Adds to the Bottom Line
Martin, an LP analyst for a major retail chain, looked at his screen and wondered. “Why were the cashiers at store 5221 popping open their cash drawers three times as often as cashiers at a similar store?” Cynthia, the store manager, rubbed her head as she read a notice from Martin that all the cashiers in her store needed to be retrained because the transactions contained “too many exceptions.” She cleared her schedule to start the hours of training, though she was uncertain where the associates were failing.
These fictitious characters illustrate a common disconnect. Poor cashier habits and untargeted training cause inefficiency and loss at the front of the store and create noise in the analytics channel. We talked with Corey Adams to find a way to address the issues.
Why are cashier techniques and retraining LP’s problem? Isn’t that up to store operations?
LP professionals need to work with store operations and management to lower risk and reduce noise through cashier coaching. Sales reducing activities (SRAs) include cashiering techniques falling outside standard approved process. Point-of-sale (POS) improvisations, workarounds, and forgetfulness are often cited as training issues, but they need to be addressed because they cause noise in the data stream. This leads to false positives in the exception-based reporting (EBR) system, which then leads to unnecessary investigations. The noise also raises the threshold for what looks like outlier behavior. True fraud is often masked, and excessive SRAs often lead to lower profits and diminished customer experience.
How does LP get involved?
At an executive level, the LP team should be developing a closer relationship with operations. LP benefits from solutions that allow them to identify SRAs. They can approach operations with ways to improve key operations metrics—better customer experience, increased sales, greater efficiency, and lower shrink. Top-level executives also need to communicate to analysts and investigators that it’s okay to be curious.
Consider your example. Martin noticed unusual activity and prescribed a remedy. However, he should have been more specific. The manager will deliver generic coaching and do it for all the cashiers, whether they need it or not. Additionally, Martin should have followed his curiosity. In the real world, Interview with Corey Adams
Adams is the vice president of client services at Appriss Retail where, since 2011, he has helped 100+ retailers around the world maximize their success with the installation, development, and usage of analytics tools and programs. He manages a team of consultants working in the US and abroad. He has more than thirty years of experience in retail and loss prevention, ranging from a Global 50 retailer to small specialty chains in both field and corporate positions, as well as law enforcement.
finding out the “why” behind unusual behavior can deliver big results. Is there a mechanical or software glitch that makes drawer-popping necessary?
Why is this an important consideration now?
Retailers have had tremendous employee churn this year, and we are looking ahead to holiday hiring. Supportive training helps stores retain employees, reducing hiring costs and employee fraud risk since new hires are more likely to steal than employees with longevity. Additionally, it communicates a commitment to employees.
LP professionals need to work with store operations and management to lower risk and reduce noise through cashier coaching. Sales reducing activities (SRAs) include cashiering techniques falling outside standard approved process. Point-of-sale (POS) improvisations, workarounds, and forgetfulness are often cited as training issues, but they need to be addressed because they cause noise in the data stream.
What do you see as the highest hurdle?
The decision to make time to implement an improved coaching process. An automated system to monitor the need, the action taken, and the results would allow store management and LP the time to focus on delivering appropriate training. Once a process is in place, though, store management will be able to deliver less frequent, more impactful training. Better training leads to a more pleasant customer experience and more efficient operations. Plus, minimizing SRAs will dramatically improve profitability.
FEATURE
WE ALL KNOW… OR DO WE? IMPROVING THE SCIENCE OF EVIDENCE-BASED LOSS PREVENTION By Cory Lowe, PhD, and Read Hayes, PhD
Loss prevention is one of the most neglected areas in criminology; in fact, searching the most prestigious journal, Criminology, for “loss prevention” returns zero articles. Likewise, a search of Justice Quarterly returns four articles; the Journal of Criminal Justice returns four articles; and the Journal of Research on Crime and Delinquency returns just two articles—and these journals have been around for decades. This is not to say that high-quality loss prevention research does not exist; in fact, our colleagues at the Loss Prevention Research Council (LPRC) have published many articles, and there are many studies in criminology and other fields that are directly applicable to loss prevention. Nevertheless, the point remains that loss prevention is an immensely neglected aspect of research.
This lack of research is problematic because retail crimes are a serious threat to retailers and communities. Retailers need to know what does and does not work to reduce shrink and protect their assets while increasing sales. Furthermore, criminal justice policies have a tremendous impact on retailers, and we need to know how these policies affect theft and other forms of shrink. If we are going to make informed, evidence-based decisions, we must conduct rigorous studies using the appropriate data. Unfortunately, even though retailers generate a wealth of data on a daily basis, many decisions are still based on anecdotal evidence—that is, on things that “we all know.”
Rigorous, well-designed loss prevention studies would not only give criminologists new insights to the causes and nature of retail losses but also help retailers and the public make more informed decisions. For example, it is common to hear loss prevention leaders suggest that raising felony shoplifting thresholds is associated with increases in shoplifting. If anyone understands trends in retail theft throughout the industry, it is loss prevention leaders who examine these trends on a regular basis; however, existing research suggests that raising felony thresholds has little to no effect on crime. Of course, the primary problem with these studies is that they often rely on official statistics to determine whether policy changes result in a change in crime.
For example, a widely discussed study by Bartos and Kubrin (2018) used data from the Uniform Crime Reports and found that California’s enactment of Proposition 47 had no detectable effect on violent crime, and possibly a small increase in some property crimes, if any. This study has been cited by policy makers and think tanks to justify raising felony thresholds elsewhere; unfortunately, studies such as these cannot account for what criminologists refer to as the “dark figure” of crime. The dark figure of crime is the number of crimes that go unreported or undiscovered and, therefore, never show up in the official statistics. If most retail theft goes undetected and/ or unreported, then studies that rely on official statistics cannot establish whether increasing thresholds are associated with changes in theft.
Of course, there are several reasons to believe retail theft is underreported. First, many retail thefts are not discovered until products are inventoried, and once a shortage is discovered, it is difficult (if not impossible) to determine whether this is due to theft or some other source of shrink. Second, one of the determinants of whether crime is reported is whether the victims believe something will be done about the crime. If individuals believe the criminal justice system will not treat
The dark figure of crime: crimes that are never detected or reported and are never included in official crime statistics
the crime seriously, then victims may not bother reporting it to the police.
If raising the felony theft threshold leads to a reduction in crime reporting among retailers, then studies that rely on official crime reports may show an apparent decrease in retail crime even if it is, in fact, increasing. Studies that rely on official statistics may not find the “true” effect of these policy changes because the increase in crime is offset by a decrease in reporting. This issue reveals two important criminological questions: (1) is an increase in the felony threshold for theft associated with greater shrink, and (2) is an increase in the felony theft threshold associated with reductions in crime reporting by retailers? These types of questions can only be answered if retailers cooperate with researchers to conduct the necessary research. However, there are many more topics in loss prevention that require additional research, including the effectiveness of loss prevention solutions, the factors that promote
effective collaboration among ORC US Spending on Science, Space and Technology investigators, and many other topics. Correlates with The Problems with Suicides by Hanging, Strangulation, and Suffocation “We All Know Thinking” $30 Billion 10,000
Of course, we all know that increasing felony thresholds is associated with increases in crime; however, there are several problems with “we all know” thinking in loss prevention, just as there are problems with “we all know” thinking in criminology. “We all know thinking” is the tendency for people to US Spending on Science $25 Billion $20 Billion 8,000 6,000 Hanging Suicides unquestionably stick with what they and others in their group think they know. First, this type of thinking is $15 Billion 4,000 problematic because in many cases, 2004 2005 2006 2007 2008 2009 we are lying to ourselves. It can Hanging Suicides US Spending On Sciencebe unpleasant to think about and admit, but there is a lot we do not Relationships in Loss know. Second, this type of thinking is problematic because it is contrary and reactive investigations were, unquestionably, the best policing Prevention Science to innovative thinking—it does practices. This lasted until research The discussion of the relationship not require an individual to think suggested that: (1) in most cases, between felony thresholds and crime critically or question what they think victims waited too long to call reveals the complexity of establishing they know, because they “know” police, so rapidly responding to causal relationships. It is important that they are right about what they these calls would not solve crimes; to establish whether relationships are know. Finally, this type of thinking (2) random patrol did not seem causal; otherwise, we might come is prone to cognitive biases; that is, to reduce crime in well-designed to believe that a supposed cause is defects in thought processes that are studies; and (3) only a small more important than it actually is. likely to produce flawed decisions. subset of cases could be solved via For example, did you know that In fact, “we all know” thinking investigations, and those that could increases in US spending on science, represents a cognitive bias known as be solved were largely solved because space, and technology is associated bandwagon bias or the bandwagon of victim cooperation and evidence with increased suicides by hanging, effect. The bandwagon effect refers collection at the scene of the crime, strangulation, and suffocation from to the tendency of people to adopt not anything done in a crime lab. 1999 through 2009? Based on the widely held attitudes and beliefs All these studies challenged policing this information, we might decide of others within their social groups. and led to more innovative, proactive that we should reduce spending on
For example, at one point, police policing strategies. science and technology. Of course, all agreed that rapid response to calls for service, random patrol, Establishing Causal it is more likely that a third factor is related to both of these and that there is no causal relationship between US science and technology and suicide. This highlights the importance of establishing causal relationships—if we believe a cause produces an effect, we will make
Bandwagon effect: the tendency of people to adopt the widely held decisions based on that belief. There are at least three criteria that must be satisfied to establish attitudes and beliefs of others within their group a causal relationship between a presumed cause (such as the adoption of a product protection
solution) and a presumed effect (such as a change in crime or shrink). First, there must be a systematic relationship between the presumed “cause” and the “effect”; in other words, when one event occurs the other event must consistently co-occur, which is called correlation. Second, the “cause” must always precede the “effect” in time; there cannot be times when the “effect” precedes the “cause” (temporal precedence). Finally, all other explanations for the relationship must be ruled out (isolation of cause). The studies on the relationship between felony thresholds satisfy the first two criteria; however, they cannot satisfy the third because they cannot determine the extent to which
the policy changes affect changes in reporting.
Different types of studies and different types of evidence are better equipped to establish causal relationships. While speaking with loss prevention professionals, it has become clear that most loss prevention decisions are made based on anecdotal evidence, at worst, or on the basis of results from a descriptive study, at best. Furthermore, even when retailers conduct an internal study, they are often rushed and are not conducted with the rigor necessary to provide the best evidence. Of course, this is the nature of our fast-paced industry—we need solutions that reduce shrink and improve sales, and we need them fast.
However, when studies are not rigorously conducted over a
1. Correlation: systematic co-occurrence of cause and effect 2. Temporal precedence: the cause always comes before the effect in time 3. Isolation of cause: all other explanations are ruled out
sufficient period of time, we may make decisions that have unexpected, negative consequences. For example, teaching kids to “say no to drugs” to reduce drug use or introducing at-risk youths to the horrors of prison to deter them from crime— both seem like good ideas at first. However, evaluations of the original Drug Abuse Resistance Education (DARE) curriculum and “Scared Straight” programs suggested that these programs and practices resulted in increased crime and substance use. Similarly, in a search to reduce loss, many retailers have locked up products in glass cases and cabinets. If the goal is solely to reduce theft, then this is a wonderful solution; however, retailers must also make sales.
The hierarchy of evidence in loss prevention research, which has been adapted from evidence-based nursing, shows the different types of studies and the “quality” of evidence they tend to provide. At the top of the hierarchy are systematic reviews and meta-analyses of well-conducted research, while anecdotal evidence and expert opinions are at the bottom. Types of studies near the peak of the hierarchy tend to satisfy all three criteria for establishing a causal relationship (correlation, temporal precedence, and isolation of cause) when they are well designed and well conducted, while types of evidence at the bottom cannot even begin to establish a causal relationship. However, the types of research at the bottom are an incredibly important foundation upon which more rigorous studies can be built.
To return to the example of locked cases and cabinets, anecdotal evidence (level 7) and research that describes the problem (levels 5 and 6) suggest that locked cases are associated with a reduction in sales. This is presumably because they introduce friction into the shopping experience. However, unless we conduct a well-designed study, we will never know whether this is true because there are many other possible explanations. For example, it is possible that retailers installed these cases and cabinets in locations that were experiencing a simultaneous increase in crime and local economic decline. This would produce a combination of reduced sales and increased theft that would have encouraged retailers to
Hierarchy of Evidence in Loss Prevention Research Of course, this is preposterous install cases to protect these stores’ diminishing profitability. Later, when management examines the sales reports, they may find that sales decreased after the cases were installed. This establishes that there quasi-experimental studies (level 4). because “it is accepted wisdom, and we know for certain” that cabinets Systematic reviews and meta-analyses 1 and cases reduce sales specifically because of shopper friction. This is a joke in “scare quotes” because Randomized we cannot be sure our explanation 2 control trials is correct. Cases and cabinets may not affect sales because they slow Evidence from well-designed down the shopping experience or controlled trails without randomization (quasi-experimental) Evidence from systematic 3 4 Evidence from well-designed case-control or cohort surveys reduce impulse sales, but rather they may just drive customers away because they signal that the store is crime prone. In this case, removing thousands of dollars’ worth of cases may not be the right, cost-effective solution; instead, stores may need reviews of descriptive and qualitative studies (meta-synthesis) 5 to take other actions to buffer the negative effect of the cases on customer perceptions by making the store locations safer, or at least 6 Evidence from a single descriptive or making them seem to be safer. If we want to produce the best knowledge regarding the effect Anecdotal evidence, qualitative study of locking products in cases on expert opinions (not based on rigorous research) 7 shrink and sales, we should conduct randomized controlled trials (level 2 in the hierarchy). In this type (Note: This was adapted from Ackley et al., 2008) of study, several stores would be is a correlation between cases and reductions in sales, and establishing Criminal justice policies have a a correlation is a key feature of case tremendous impact on retailers, and we control and cohort studies. However, to ensure the trend started after the need to know how these policies affect locking cases were installed (and theft and other forms of shrink. not before), retailers must examine the trends in theft before and after If we are going to make informed, the installation. Examining the evidence-based decisions, we must conduct trends before and after installing the cases will allow managers to ensure rigorous studies using the appropriate data. there is a correlation and that the Unfortunately, even though retailers generate cause preceded the effect—two of the basic criteria for establishing a wealth of data on a daily basis, many decisions causal relationships. Examining are still based on anecdotal evidence—that is, the “before and after” effects of a solution is a key aspect of many on things that “we all know.” randomly assigned to a control and
treatment group, and glass cases would be installed in the treatment stores to determine whether these stores experienced reductions in sales, theft, and customer traffic, and whether installing the cases was associated with increased fear of crime. All of these factors (sales, shrink, customer traffic, and fear) would need to be measured before and after the installation of the cases in order to establish a correlation between cases and these outcomes, and to ensure that cause led to the effect. However, random assignment of stores allows us to rule out other explanations because it ensures that any differences between the groups is due to random chance only; in other words, the control group and the treatment stores should be very similar with regard to other characteristics. This is important because it means there cannot be any other factor that explains differences in outcomes between the stores. This study would enable us to understand the effects on sales and shrink and would provide evidence of whether this was due to decreased store traffic and/or increased fear of crime at the store.
Finally, at the peak of the hierarchy are systematic reviews and meta-analyses of well-designed and well-conducted studies. Systematic reviews are highly structured summaries of research on a topic, while meta-analyses provide a quantitative summary of the effect of one or more phenomena on others. For example, there are meta-analyses of the effects of drugs across many studies; these provide a summary of the average effect of a drug. However, to conduct meta-analyses and systematic reviews, there must be a large amount of research on a topic. Unfortunately, we have not
There are several problems with “we all know” thinking in loss prevention, just as there are problems with “we all know” thinking in criminology. “We all know thinking” is the tendency for people to unquestionably stick with what they and others in their group think they know.
conducted enough well-designed and well-conducted studies to even begin to conduct a meta-analysis. In other words, we don’t know enough.
Improving the Science and Practice of Loss Prevention Research
The industry can do many things to promote evidence-based research. The first step is not to be too ambitious—there are many things that we do not know that we do not know because we have not conducted basic research. For example, qualitative and observational studies need to be conducted on topics such as: (1) what works to encourage compliance with mask policies, (2) what is the safest and most efficient way to conduct curbside delivery, and (3) what factors contribute to the successful prosecution of ORC offenders. Heck, we don’t even have a good, industry-wide definition of organized retail crime. Addressing these types of issues and answering these types of questions are the foundational first step to promoting evidence-based practice.
Of course, making loss prevention evidence-based will require that retailers invest in research, but there are many opportunities for retailers to do this. First, there are many young (and old) researchers at universities who must produce research to advance their careers. Many of these scholars need data and would love to conduct surveys with your customers or access your existing data. Furthermore, they are accustomed to doing research with humans and protecting their privacy and confidentiality. Of course, all of this is also true of organizations like the LPRC that work with retailers and LP solution providers every week to conduct impactful, relevant research. A large amount of research needs to take place, and it will take time to develop loss prevention into a fully fledged science with a large body of research findings. Nevertheless, if we work together as an industry, then one day we will be able to honestly and confidently say what we all know and what we do not know.
DR.CORY LOWE is a research scientist at the Loss Prevention Research Council. He received his doctorate in criminology in 2020 from the University of Florida (UF). At UF he specialized in crime and delinquency prevention, communities and crime, criminological theory, and research methods and data analysis. He has published in peer-reviewed journals and other scholarly publications on the causes of crime, crime and delinquency prevention, and the factors associated with substance use and delinquency.
DR. READ HAYES is director of the Loss Prevention Research Council and coordinator of the Loss Prevention Research Team at the University of Florida. He can be reached at 321303-6193 or via email at rhayes@lpresearch.org.
