In today’s difficult economy, most convenience store owners are turning their focus to profit driving initiatives to give business a boost. When dollars are tight, allotting extra funds to upgrade security equipment might seem a lower priority or even a frivolous expense, but experts note investing in security and surveillance measures can be a retailer’s biggest ally in growing profit dollars.
“Even in a prosperous economy, driving profits can be a daunting task,” said industry veteran Rolland Trayte, president of Loss Prevention Consulting in Scottsdale, Ariz., who has a long history of loss prevention experience with companies such as Circle K, Phillips 66 and Conoco. “What most operators fail to recognize is that while creating profit is a result of marketing strategies, retaining that profitability is a by-product of loss prevention programs. Every dollar we don’t loose to dishonest employees, dishonest customers, vendors or other controllable expenses, falls right to the bottom line in profit. There’s absolutely nothing a company can do to put profit dollars to the bottom line better, faster and safer than reducing and controlling loss.”
Retailers can start maximizing profitability at their stores without spending a penny by instituting loss prevention techniques that range from ensuring clear visibility across each aisle and greeting customers as they enter the store, to being mindful of how they are merchandising high loss items and being diligent about inventory checks.
Preventing loss also begins with exercising good hiring practices, such as conducting reference checks and verifying background information on new hires. Using business analytics to monitor cashiers with questionable transactions, such as a high number of no sales or low average transactions, can help catch issues early on and prevent larger problems from developing. Setting policies and then training employees in chain protocol when it comes to robbery and violence, confronting potential shoplifters and working outside after dark can reduce the likelihood that the store might be robbed.
Above all, installing quality surveillance equipment and actually reviewing the videos is a vital part of loss prevention. “I’ve talked to a number of professionals in the industry, and the only way a camera will help stop internal theft is if the manager uses their CCTV or DVR system to review it. If they don’t, it is a waste of money,” said Kirk Luke, a loss prevention expert and the former director of Loss Prevention at Circle K’s West Coast stores.
Trayte noted that as retailers review the video they should make it a point to reinforce good conduct as a way to make sure employees know their work time is being monitored.
Surveillance Tech Trends
“As profits are squeezed and capital resources limited, operators are finding that they need to develop a greater reliance on technology to supplement their security efforts,” Trayte noted. He added that in the last decade a plethora of technology advancements have impacted the surveillance industry.
For example, digital video recorders (DVRs) are commonplace today, while their predecessor—the VCR—is commonly considered antiquated. A new breed of camera offering IP (Internet protocol) connectivity and advanced features, such as low-light adjusting, infrared, remote control pan and zoom and motion detection, is giving retailers a leg up on store surveillance.
When deciding what security measures are right for their chain, Luke said retailers should start by asking themselves what they hope to accomplish with the surveillance system. Are you putting it in as a deterrent? For a safety reason? To increase security?
Depending on the answer, retailers might want to examine options ranging from adding audio capabilities, point-of-sale (POS) interfacing, or alarms for backdoors, ATMs and safes.
At Circle K, Luke wanted to focus on the cash registers and found monitoring POS audit trails through a DVR system allowed him to track specific transactions. “I could search based on voids, refunds, transactions over $100 or whatever parameter I wanted. Clicking on an external audit trail button would pull up all of those alarms, take me right to the video and pop up the POS transaction right to the side of it,” he said.
Luke had managers view 20 minutes of video daily, with profitable results. “My shrink went from 3% down to .65%, so I saved $1.7 million in 2009 out of 166 stores.”
As a byproduct of these video audits, Luke also experienced how cameras can combat false workers’ compensation claims firsthand at Circle K. “I put cameras inside our coolers, inside the stock room and in locations I felt I was having workers comp issues. If an employee filed a claim for a back injury due to a slip and fall in the cooler, I’d say, ‘I have a camera in there, let’s look at the video.’ Then all of a sudden the story would change,” he said. “The next thing you know they said the back injury didn’t happen at the store after all.”
Today, the industry is abuzz about IP cameras that are viewable on the Internet and can interface to online archives of data. While their price point is high, it has dropped significantly over the past 5-7 years.
But, Luke noted, even though IP cameras cost considerably more than a standard CCTV model, “you don’t have to install as many because the IP lets you zoom into different portions of the store and get a clear image. With the basic CCTV camera as you zoom in it gets distorted as the pixilation gets too big.”
If you have the budget to go to IP cameras it’s worth the investment, Luke said. “It’s the best quality and the best evidence you’re going to get. But before anyone hops on the IP bandwagon, they need to ensure they have a high quality DVR system to support it, or they might be throwing their money away,” he added.
It’s also crucial to be cognizant of the major quality difference between professional security systems available from security integrators and so-called “nanny cams” sold at big box retailers that are geared more toward parents monitoring babysitters.
“I’ve seen big box stores offer four camera packages for $395—where $395 in a professional security system might buy one camera. The package might appear similar, but there’s more often an enormous difference in the quality of the recording and durability of the product,” Trayte said. “The video image does no good if the quality is so poor that suspects aren’t readily identifiable in court.”
A number of special features also can make a big difference, depending on camera placement in the store. Cameras that sit close to windows where sunlight can affect the images can benefit from an auto iris, which will help darken the photo and prevent the image from whiting out. At night the auto iris would automatically open to better light the video. Cameras that respond to motion sensitivity can work best in a cooler or low traffic areas of stores, so they are not running continuously and eating up valuable DVR space.
Audio is another option to consider, but one that also has the potential to backfire.
For example, if a customer sues your chain claiming that an employee used questionable language, you can listen to the audio to prove the customer’s claims are bogus, but if the employee was at fault, now you have evidence against your company.
“There’s no question that some contemporary security techn
ology can be expensive, but it’s as crucial an investment of capital as a new fountain drink machine, the automated cash counting safe or the bright new lights that promote customer and employee safety,” Trayte said. “Putting profits to the bottom line has taken on a larger meaning for retailers and c-store operators. And nothing creates profit faster or more efficiently than controlling loss.”