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The two faces of retail crime

Retailers trading today are facing a binary fight against crime, with the virtual and physical worlds proving two very different challenges.

By Catherine Murray | July 20, 2016 | News

Gary Morrison, CEO of the New Zealand Security Association.

She'll be right, mate?

So how is our nation tracking in its fight against crime? Gary Morrison, CEO of the New Zealand Security Association, says from the Association's perspective there are mixed views when it comes to security in both the online and bricks and mortar stores.

"With many of our retail outlets being overseas owned, they are required to comply with head office or corporate directives when it comes to security measures and in many cases those measures, at both a physical and policy level, represent good practice and are appropriate for the risks faced."

Yet our Kiwi complacency does not do us any favours when it comes to ensuring those security measures are followed and neither do the short cuts that are often taken because of the belief that 'it just won't happen here'. Morrison says that the complacency can range from staff leaving a door propped open, rather than being access controlled, through to retailers using a single staff member to walk the daily cash takings to the bank rather than utilising a cash collection service. There is also taking the lower cost option for security, rather than ensuring security measures are appropriate and commensurate with the risk faced.

Ryan Clark, NZI.

Prevention beats cure

While New Zealand's isolated geographic location makes it harder for pests and disease to penetrate its borders, the internet knows no boundaries when it comes to cybercrime.

"There is a quote that goes: there are only three kinds of companies in the world - those who have been hacked, those who are going to be hacked, and those who don't know they've already been hacked," Ryan Clark, national manager liability at NZI says. 

The threat to New Zealand organisations is very real, unrelenting and growing at an exponential rate. Clark says many experts state that on average cyber criminals go undetected in a company’s network for 229 days, and a lot of damage can be done in this time.

“Many New Zealand companies are not aware of the financial and reputational consequences of a cyber attack on their business, let alone that the additional costs in resolving the situation are insurable using subject matter experts,” he says.

Doing business online exposes companies to risks they may not have even considered, he says, and when these risks become a reality, the damage can be devastating to their business. Which means that cyber protection is now a critical must-have insurance for any business.

“New Zealand business owners need to expand their risk-management considerations from the traditional perils of fire, flood, theft and health and safety, to now include topics such as cyber security, crisis response and reputational damage control.”

To this end, every NZI Cyber policy holder has access to a 24/7 Emergency Helpline they can call instantly, and a Breach Coach who will work with them to minimise the impact to their business. On activation of the hotline number, the first task of the team is to assess the situation and manage it end to end. The coach then deploys the necessary cyber experts to tackle the problem, including IT, legal and forensic, with the addition of PR experts for those businesses with NZI's Ultra policies. Cyber Ultra takes the cover provided by Cyber Base to the highest level, and provides a full suite of coverage, adding Business Interruption, Brand and Personal reputation cover, Computer Crime and Payment Card Industry (PCI) Fines and Penalties. The coach then works with the business to help them resolve the issue as quickly as possible.

Clark also mentions that New Zealand has some catching up to do on the global front.

“The sooner New Zealand updates its privacy laws in line with those of the US, Europe and Australia, the more confidence our overseas trading partners will have trading with New Zealand businesses."

Shopping around for security

The world of ecommerce is exciting, says Chris Hails, security consultant with NetSafe. "Anyone can set up a website in an hour and start selling to anywhere in the world. There are fantastic possibilities when your business is online 24/7."

Yet it still pays to be clever with security measures. Hails says that at NetSafe they see a lot of security breaches around low level websites where people have paid a relative or friend to get a retail presence up and running. Often websites are set up and left in the state that they were built, with little maintenance on the security front.

"You need to allow some budget to have someone, a web developer or a security expert, maintain the software, and even run a penetration test, a professional hacking test to exploit vulnerabilities," he says.

New Zealanders are really handy, and will often take the DIY route to building a retail web presence, getting it up and running with money rolling in, even it they don't know everything about security. Unfortunately this approach sees many small companies exposed to risks that they have never considered.

Hails says that if you're looking for a developer, then security needs to be on the shopping list. Ask potential developers questions like:

Do you know about web security?

Are you aware of the security standards?

Can you read the results of a penetration test?

Do you know how to code securely?

It's a case of being aware and doing things properly, he says, in order to mitigate security risks and reduce the occurrence of unwanted events.

Trends in the crime sector

Gary Morrison says trends around physical crime can be divided into three perspectives - shoplifting, robbery and burglary.

Shoplifting: current statistics show losses from shoplifting are at the highest ever recorded levels, with the trend showing that these are continuing to increase, Morrison says. Retailers are using a range of measures, including personnel (retail security staff), physical (mirrors) and electronic (tags and scanners).

"However, from a security industry perspective, the investment into these measures seems somewhat disproportionate given the value of losses incurred and these almost seems to be an acceptance that this is a cost of doing business."

Robbery: trends over the years have seen a decrease in retail robberies, which Morrison says is probably due to reduced amounts of cash in circulation, increased use of CCTV and harsher penalties being imposed where cash or goods have been obtained under threat. Yet there is an exception to the trend with high risk retailers, such as smaller liquor stores, which continue to see a high level of incidents that are often opportunistic in nature.

"We believe that most retailers take appropriate steps to prevent robbery," Morrison says. "However, we do have concerns regarding staff being required to walk cash takings to the bank and poor cash handling procedures."

Burglary: Morrison says that burglary trends have seen the number of offences stay static, or reduced slightly over the last five years. Yet there are more targeted burglaries where offenders focus within certain geographic boundaries, or target specific products or sector types.

"Most retailers have monitored alarms. However, a number do not utilise a response company and rely on management or staff to attend to any alarm activation. This places the attending person at considerable risk and clearly breaches Health and Safety obligations if that person has not been provided with appropriate training and support."

Grant Bai, CEO of Green Cross Health.

Prescribing education for safety

Grant Bai, CEO of Green Cross Health, says creating and maintaining a retail environment that is safe for staff and customers is paramount. As one of New Zealand's largest retail networks, Green Cross Health has Unichem and Life Pharmacies in communities the length and breadth of the country. The company empowers staff to understand and use best practice security measures, and provides the means to achieve this.

Retail staff are encouraged to complete online training modules, which are part of the Green Cross Health Academy and are NZQA recognised. Launched in 2015, over 2,300 users have enrolled in the learning and development platform since last year.

“There is an e-learning module specific to security which covers fraud, shoplifting and armed holdup. It shows how to handle situations once a shoplifter is spotted in store and gives staff the confidence to make the best decisions under pressure."

Feedback from staff shows the retail operations module gives staff the skills and coincidence to deal with shoplifting, especially in the busy summer periods.

Designer approach

The journey to secure retail sites has been steep for the team at I Love Ugly. From one tiny store to five stores and 30 retail staff, the men’s clothing and accessories retailer has learnt on the job about security and crime.

Starting out small gave the brand some protection against crime says William Cole, retail operations manager and team leader at I Love Ugly.

“We had one little store, and because we were an emerging brand, we only had select people shopping with us. At the time, there was no risk in our minds. But as the company grew that started to change. As more people know your name, there are more of the bad people that know your name too.”

It was the theft of a pair of pants, being worn out the store by the offender, and the subsequent chase on foot, rugby tackle and retrieval of pants in front of the police that signalled it was time to step up security at the I Love Ugly stores.

In addition, the Newmarket store was a victim of a car driven into the window, a brick through a glass door, and the break down of another door, all within a six month period. The result was an all-out refit - door beepers, roller doors, and an improved high definition security camera system.

“Unfortunately we had to react rather than be proactive,” Cole says. “We did lose some stock in the process - but we did learn a hell of a lot.”

The company also had some harsh lessons when it was found a staff employee was helping themselves to a free wardrobe. Cole says the experience taught them to be extra particular about who they hire.

“We look at more than just the face value of the CV and what people say they are capable of. We sit down and really get to know the candidate on a personal level.”

It’s about being super-specific in what you are asking your candidate, so you really understand them, he says.

“Instead of just sitting down for 10 minutes and having a chat, sit down for 10 minutes, go for a coffee, reassess a week later, talk on the phone, talk through emails - whatever it takes to get a full rounded picture of who the person is and how they conduct themselves.”

In addition to this process of hiring staff who have an honest ethos, it tends to improve rates of staff turnover, which has been zero over the past year for the company.

I Love Ugly also has strong ties with security guards that work in the areas of its stores. Cole says employees have a really good relationship and rapport with the guards, who check in on the stores and are quick to assist should the need arise.

"Security is all about covering ourselves as far as possible by taking every little step that we can, and making sure that that what we are spending money on is worth it," Cole says.

Gemma Croombes, Morepork.

A bird's eye view

Peace of mind is key to Scott McMillan of Wellington's Tea Pea homeware stores security drive, as is staying in control. Installing an alarm system where he is able to remotely monitor the stores during the day has been a success. It has also reduced the need to visit the stores during the night due to false alarms.

"What we do now is when the alert goes off, we log in immediately, have a look, and if it is a false alarm, we can turn the alarm off, turn over and go back to sleep."

Retailers have the same concerns as the rest of us, says Gemma Croombs, CEO at Morepork.

"They want the security that comes with knowing that you can keep an eye on what is going on while you are away, and be alerted should anything be amiss."

With Morepork, retailers are able to monitor their premises remotely from the app on a smartphone, and do anything from peeking in to see how busy the store is at any given moment, through to checking that everything is locked up and secure once the shop is closed for the day. For business owners with multiple stores there is the function to be able to switch between stores.

"It is really useful for retailers during the times when they are away from the store," Croombs says. "If they get an alert that something has been disturbed, they are able to check immediately, see what is going on and take action if necessary."

Mark Forsyth, Z Energy general manager of retail.

High traffic areas address crime

Speeding ahead in the fight against retail crime is Z Energy. Mark Forsyth, general manager of retail, says for some countries that means stores set up behind screens and bars, which is great for security, but not so great for the consumer's retail experience. For Z Energy, Forsyth says it's about building a safer environment for staff and customers, constantly reviewing systems and processes and keeping up with international trends.

Z Energy approaches security from two angles: the hardware and the software.

Hardware comprises the physical elements that are put in place to prevent events and assist with detection should an event occur. The design and layout of a store needs to make it unattractive to those who are up to no good, says Forsyth, with consideration given to bright lighting, ensuring egress points are visible and in the open and keeping the front of stores clear from merchandise. This last point, he says, is vital, and something that many retail stores do not practice.

"You need to be able to see into a store. I see dairies and other stores around New Zealand where the windows and store fronts are completely covered with posters and advertisements. Quite frankly, anything could be going on inside. Our stores are very much the opposite and we make sure that there is a clear line of sight from the street into our stores."

Technology is also key in the fight against crime says Forsyth, with Z Energy employing the latest advances. Smoke cannons blanket a store in a thick fog in seconds, which visually disturbs and disorientates unwanted characters and makes it impossible for them to see their hand in front of their face. SelectaDNA provides police with a link between an offender and the crime scene, spraying a fine DNA laced mist, unique to each location, which stays on the skin for up to ten days and glows blue under ultraviolet light. Maximum security intelligent safes work like ATMs, taking in money, instantly locking it away, with the bonus of counterfeit readers to catch dodgy notes. The $8 million digital CCTV network throughout Z Energy's 200 plus sites means that someone is always watching, with about 13 digital, high definition cameras filming forecourt pumps, the entrance and the inside of each site, with footage instantly displayed on a big screen.

In February 2016 Z Energy rolled out licence plate recognition software across its network to assist in conquering the $1.5 million per year that is lost through drive-offs. When a vehicle is involved in a drive off, the number plate is captured in the system. If the vehicle re-enters any Z Energy site, the technology reads the plate, focuses the cameras on the vehicle and driver, the pump turns on to pre-pay and prevents filling up without payment first and employees are immediately informed the car is on site.

Social media also gives a helping hand in apprehending offenders, with Z Energy's 300,000 Facebook friends engaging with posts of high quality images of offenders. Forsyth says recent cases of robberies in Auckland and Wellington were solved within a few days following the posting of an image on social media.

The other side of Z Energy's security suite is the software, which is the 'people stuff'. This includes how staff can keep themselves safe with situational awareness training, says Forsyth.

"What we find is that scenario training is useful, but it's not enough on its own. If you train people to deal with a particular scenario, it's good, but if the events that unfold in front of them are different to a scenario they've been trained in, then people can be disorientated. We train people to deal with situational awareness, dealing with whatever set of circumstances that come up in front of them."

By its very nature software is the hardest of security measures to deal with, says Forsyth.

"You're dealing with people, and people react in different ways under pressure. What we talk a lot about at Z Energy is why we want people to keep themselves safe, not the 'what' in terms of what equipment to use. If the people get the 'why', then the 'what' will follow."

Counting the costs

For offenders crime often doesn't pay, but the cost for retailers may be far more wide reaching that just the financial cost of the loss suffered, says Morrison. He says that often it's seemingly minor incidents of theft and burglary that have a considerable impact on business operations.

He explains how he recently met with a retailer who had a number of vehicles used for servicing and delivery purposes that were broken into overnight while stored at the rear of the retail store. Batteries were taken and fuel drained. It took a full day to get the vehicles mobile again and this impacted on a large number of customers, several of whom cancelled their jobs and orders as a result of the delay.

"Crime can also have a significant emotional and physical impact on those staff and managers impacted by it – in the worst instances that can obviously involve injury but often staff will feel violated or unsafe after being the victim of or impacted by crime," Morrison says.

Security vs. customer experience

It takes a bit of skill to balance security needs and customers’ shopping expectations and addressing the two factors can provide a challenge.

"We appreciate that retailers face a number of difficulties when dealing with security matters," says Morrison. "In particular, providing the highest levels of service and convenience for their customers, whilst also having responsibility for the care and safety of customers, staff, and their products, together with having to operate within tight financial constraints."

These responsibilities are often in conflict, he says, particularly when the implementation of effective security measures may impact on the shopping experience of the customer, such as the searching of bags as they exit a store.

"From a security perspective we would suggest that retailers need to place a higher focus on the use of security measures, given the risks that are faced."

This story originally appeared in NZRetail magazine issue 744 June / July 2016

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