Counting the cost

There are lies, damned lies and statistiCS. Or so the saying goes. Security and loss prevention practitioners can rest assured that the results of the British Retail Consortium’s (BRC) Retail Crime Survey 2004-2005 are – as always – based on solid fact. That being the case, it’s all the more worrying what this year’s survey results reveal.

In 2004, the total estimated cost of crime – including crime prevention – to the retail industry was £2.13 billion (the corresponding figure for 2003 was £1.96 billion). Overall losses from retail crime are estimated to have increased by a staggering £420 million on the previous year, while the total cost of crime across the board has shot up by £170 million.

The ongoing problem of customer theft is said to have cost the retail sector £589 million in 2004. That represents a massive 44% increase from 2003. Incidents of known theft by customers increased to 3,385 per 100 outlets from 2,866 (that is measurable against a five-year average of 2,838). One can point to a more than worrying upward trend, then, in both the number and overall value of incidents.

In a similar vein, the value of losses attributable to staff theft has risen to £498 million from 2003’s total of £282 million.

During the year covered by this latest survey, burglaries cost the retail sector something in the region of £55 million. The cost of robbery rose to more than £8 million. The cost of fraud also increased, mainly as a result of card not present fraud (of which many of us have been unsuspecting victims). In total, fraud cost the retail sector £68 million in 2004, up from £61 million the previous year.

Criminal damage, meanwhile, has nearly doubled to £24 million, which is well above the five-year average of £19 million.

Violence and verbal abuses

“The most worrying trend,” states the BRC’s director general Kevin Hawkins, “is the continuing growth in violence and verbal abuse directed at retail staff. While this is no doubt linked to the growing incidence of ‘yobbish’ behaviour in our society that the Government has acknowledged, we need tougher policing and stiffer penalties to stop it.”

Another sobering thought, of course, is that these figures do not reflect the whole truth about retail crime. Many of the smaller retailers don’t bother to report incidents because they think it’s a waste of time and effort. The police service will not – or perhaps cannot – do anything, they feel.

Certainly, the fixed penalty system for shop theft – introduced by the Home Office last year, and toughened up in response to representations by the BRC – appears to have had some acceptance by the sector, although it is probably still a touch too early to tell if there has been any change in offending patterns as a result. A question mark continues to overshadow the deterrent effect of ticketing on drug-fuelled shop thieves.

“The BRC has campaigned successfully for many years for practical measures to combat crime against our sector,” suggests Hawkins in the BRC’s final Retail Crime Survey report, “resulting in the creation of Action Against Business Crime, which strives to develop and support business crime reduction partnerships (see panel ‘Action Against Business Crime: By Business, For Business’). Despite this, retail crime is still seen by many quarters – including the national media – as being synonymous with shop theft. A rather trivial form of misbehaviour which doesn’t really hurt anyone. That couldn’t be further from the truth.”

Fighting back on crime

Hawkins and his organisation welcomes the continued drive by Government to tackle crime. Police numbers now stand at a record high, with almost 143,000 full-time equivalent officers supplemented by over 6,000 Police Community Support Officers. There are also 12,000 Special Constables in active service on a part-time basis. Is that enough bodies, though?

The challenge now lies in how to make policing responsive to the range of crimes experienced across the retail environment. At present, evidence would appear to suggest a problematic relationship between retailers and the police service. According to the BRC, the system of crime reporting by police forces demands modification such that the incidence of crime against businesses is specifically captured. By and large, the police service is prioritised to tackle non-commercial crime. There is also no specific measurement of business crime, a lack of transparency which compounds the problem still further.

It could be said that investigations into organised crime are not properly co-ordinated between police forces. In the current climate, even those cases where losses exceed 100,000 can fail to receive police attention. As stated, there’s also a widespread perception – particularly among SME retailers – that retail crime remains largely unpunished by the Courts. Those same SMEs will thus fail to report all crimes, creating a vicious circle of tolerance to criminals which needs to be stopped.

From now on, crime reporting by victims simply must be encouraged to aid fuller analysis of the true extent of retail criminality. SMT is in agreement with the BRC in its belief that the Sentencing Advisory Panel and the Home Office should separately review the approach taken to shop thieves by the police and the Courts in view of new disposal policies (ie fixed penalty notices) and inconsistencies when compared with other offences.

In light of the £700 million spent annually by the retail sector on crime prevention measures, perhaps the Government should be looking to review incentives and disincentives to the supply of security products?

Stop Crime Against Retail

More than any other, the retail sector experiences the impact of anti-social and yobbish behaviour at first hand every day of the week. Operating at the heart of the community, whether in a local convenience store or an out-of-town supermarket, for example, retailers are a constant target for organised gangs, drug-fuelled miscreants and those bent on causing trouble and hardship for no good reason.

Retail crime is not just shop theft, remember. It encompasses graffiti that ruins shop fronts, vandalism that can cost thousands of pounds to repair and abuse and threats that serve to demoralise staff. Most important of all, perhaps, it can introduce a culture of fear and burglaries that might cripple businesses.

Through the message of ‘Stop Crime Against Retail’, the BRC will be seeking – over the coming year – to highlight the full extent of crime against the retail sector, focusing the attentions of the policy makers, the criminal justice system and the wider society on the real impact criminal behaviour can have on the lives of shop staff and owners.

In its 12th annual Retail Crime Survey, the BRC highlights a number of key issues to be tackled. The aforementioned rising tide of violence is one of them. The reasons for it are complex. Research by the Home Office suggests that 80% of shop theft incidents are driven by drug abuse. Other flash points occur as a result of enforcing Government restrictions on the sale of high value goods such as tobacco and alcohol. Here, the retailer is in a tricky situation. Enforcement of the rules can lead to violence, but any failure to comply with the law can lead to prosecution.

Here, policing is the obvious focus of attention, particularly in terms of whether or not officers are responding to violent incidents in an appropriate manner. One suggestion is that the rise in violence is localised on certain groups, one of them being retail. It is true to say that, at all times, the retail sector is already striving to protect members of staff. Telephone interviews conducted by the BRC with the heads of security of a selection of major retailers revealed that all had conflict resolution training programmes in place, as well as post-incident support.

On that note, to its great credit the BRC is now working alongside the Health and Safety Executive to review the information available to businesses for those seeking to prevent and deal with the aftermath of violent incidents. Ultimately, a multi-agency and multi-stakeholder approach must be adopted to tackle violence in retail outlets.

Reasonable internal security measures ought to be accompanied by targeted staff training. Commendably – and with support from the BRC – the Union of Shop, Distributive and Allied Workers (USDAW) has already run a successful campaign to raise the profile of violence against shop staff (and which has since evolved into the ‘Respect’ agenda).

Sentencing must be tougher

Home Office analyses of over 100,000 people found guilty of theft offences in Magistrates Courts during 2002 revealed the following breakdown of disposals: community penalties 34%, absolute or conditional discharge 21%, fines 20% and custody 19% (with 5% appearing in the ‘Otherwise dealt with’ category). The average fine was £80, in keeping with the fixed penalty notice scheme.

This raises a question over the level of fines that are appropriate in such cases. An £80 fine may be a substantial penalty to some offenders, but in truth is comparable to fines meted out for some motoring and parking offences. In other words, that places shop theft – which necessarily involves dishonesty and the stealing of goods – on a par with civil offences of a far minor nature. Surely this isn’t right?

Interestingly, in addition to those prosecuted, a further 51,000 people ‘caught’ by the Home Office survey received cautions, meaning that almost half of the offenders in the sample (where some kind of formal action was taken) received no punishment at all. That is an alarmingly low number. To some extent, ‘ticketing’ may help solve the problem by dint of the fact it offers police a rapid disposal option. However, such data takes absolutely no account of theft where no offender is identified, nor of those occasions when the police take no action. Suffice to say that a full and thorough review of sentencing policy in this area is long overdue.

Organised crime and fraud

As suggested earlier, there is growing concern at the apparent lack of action taken by police forces in relation to fraud and the actions of organised crime gangs where offences take place over multiple police force areas. The separation of police forces by geographical area has always engendered issues around the appropriate co-ordination of investigations, but these have become more marked in recent years as police attention has skewed towards other types of offence.

Under the current system, there is little incentive for forces to pursue offences beyond their own area. Liaising with other forces is viewed as being resource intensive. Thus those resources are diverted elsewhere to improve case clear-up ratios. As a result, national retailers operating in many different police areas are frustrated when investigating the work of criminal gangs. Where those same gangs develop successful theft and deception ploys, they will commonly move around the country using similar methods to extract funds from the same retailers in other locations. Moving around minimises the gangs’ visibility, of course. So how do we combat them?

Local fraud squads are clearly in decline. Only around 700 officers now work in specialist fraud units, and 200 of them are based either in the City of London or within the Metropolitan Police Service.

However, on a positive note the creation of the Serious Organised Crime Agency (‘SOCA: is this Britain’s FBI?’, SMT, September 2005, pp18-21) presents an opportunity to deal with gangs of thieves and fraudsters. The new agency’s focus is currently intended to be on crimes with the highest profile, but enough lobbying by the industry could well change the Government’s mindset, at least to some degree.

Recently, the opportunity to tackle fraud has been lost. Retailers are being penalised at every turn by a growing awareness among criminals of how they can operate with near impunity. Reform is needed. Indeed, it is essential.

Incentives for added security

Investment in security measures costs the retail sector an average of £720 million per annum, of which 60% is (typically) accounted for by physical security measures (excluding the deployment of manned security). That fact has been recognised for several years.

Last year, a Working Group was formed under the auspices of the Home Office – but ultimately led by businesses – to look at ways of incentivising the uptake of enhanced crime reduction measures. There are two central issues here. One is the perception among retailers that security products (CCTV, access control and intruder alarm systems, etc) have a high cost attached to them, and that a tax burden will follow their installation.

It must be stressed that funding schemes do exist. Raid-control is a good example of an initiative that’s often able to channel some funding through sources available to police forces for approved security measures.

A ‘Security Investment Tax Relief’ has been discussed on more than one occasion. Any relief on capital investment would definitely create a genuine incentive for security products to be installed. Perhaps the Government could look at categorising security products as lower-rated VAT goods?

At the end of the day, retail security managers and loss prevention specialists must work in tandem with the BRC and its partners to encourage both the Home Office and the police service to recognise that retail crime stabs at the heart of much of what is bad and ruinous in our society – lack of respect, violence and aggressive behaviour and alcohol and drug abuse. It is a scar on our communities that demands to be tackled with vigour. n