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How to Reduce Retail Shrinkage by Two Thirds? Concentrate on Shoplifters and Staff

15 minute read

How to Deter a Thief
– the Expensive Way and the Cheap Way

There was a time when a photo would be taken of a shoplifter for the shop’s album before they were handed over to the police. But those albums filled up fast and became useless – no employee could memorize them.

The Expensive Way – Security Cameras

Store owners can now turn to powerful security cameras equipped with facial recognition software. One of the leading providers of this service is the California-based US company FaceFirst. The system recognizes the people entered into the system (people caught stealing, wanted criminals, etc.). It has a tremendous capacity, comparing the face of a person to 25 million faces in the database in only one second. FaceFirst holds true to its promise – the security employee will be notified as soon as a person who has been caught stealing before enters the store.

While couple of years ago, the company’s customer base comprised of large Fortune 500 companies, their intro video now states that its customers also include small store chains and pharmacies.

The company claims that shoplifting has decreased by 34% in the stores that use their system.

Facial recognition software gave rather meager results only some years ago but has evolved in leaps and bounds and now identifies the face of a criminal even in dim lighting or when the person has grown a beard or is wearing sunglasses. Certain software can even detect when a person is using a stolen bank card. FaceFirst’s competitor StopLift that specializes in monitoring points of sale claims that their software has helped detect 3.1 million shoplifting cases. The company’s website reads, “No sweethearting any more!”

The truth is that stores don’t like to talk to the media about having integrated such systems. Walmart tested the system in 2015 but had to give it up due to public pressure. However, many store chains use the system and due to the decrease in prices, it can even be found in smaller shops. They just keep it a secret. Lowe is among the few larger US store chains that has admitted to using AI-based facial recognition software.

Due to the fact that the software still has room to develop, it brings with it a number of problems. Privacy issues are only the tip of the iceberg. introduces the results of a recent study by MIT Media Lab – an analysis of three facial recognition software revealed that the recognition process isn’t going as well as one might expect. While the software can recognize a white male with 99% accuracy, it had a 34% failure rate when identifying black females. This, however, can give rise to racial discrimination as a person may be accused of dishonesty due to their skin color.

On the other hand, shop owners are debating the systems’ legality in a situation where customers are not aware that the software is in use. In an interview with FaceFirst’s CEO Peter Trepp explains, “Legally, you don’t have to have signage. You don’t have to say anything to anybody in most of the states of the United States. There is no federal law.”
Regardless of the iffy areas, experts recommend using the software (if laws permit). It’s just important to note that it may make the occasional error and it would be decent to inform customers. To alleviate fears, it would be wise to list all the known benefits of facial recognition software, e.g. how it helps find lost children and Alzheimer’s patients.



The Cheap Way – Drawing Eyes

Why is it that people nearly always notice when someone is staring at them? Scientists claim this is a survival mechanism inherited from our ancestors. If an animal was staring at another, it usually meant that the latter would get eaten. Predators are known to stare down their victims before making the decisive leap.

Although people don’t tend to eat each other, the instinct has survived. Our brain helps us detect when someone is watching, even if we barely notice it from the corner of our eye. This phenomenon is called gaze detection.

Social psychologist Ilan Shrira tells Psychology Today that direct eye contact might be the most frequent and powerful form of non-verbal communication people use – from intimate relationships to the way a dog and its owner affect each other through eye contact.

Eyes indicate that someone is watching and controlling you, that they know what you’re doing. It is a form of discipline. This is why posters and signs depicting eyes or close-up photos of eyes help deter shoplifters.

The Nottinghamshire police force in the UK successfully used a large poster depicting the piercing eyes of a police officer and the texts “We are watching you!” and “Live police CCTV cameras are operating in this area today” during an 18-month campaign. 

The posters were also put up in shops. What the police didn’t expect was that, as a result, shoplifting decreased by 37%. No similar decrease was detected in neighboring regions. Admittedly, there is no data on whether shoplifting returned to former levels later. So, eyes on the wall in every shop!


Fun Fact: Did You Know?

When the First Ever Security Guard was Hired?
Theft has been the bane of a merchant’s existence for as long as there has been trade. Retail economics professor Joshua Bamfield writes in Shopping and Crime that the term “shoplifting” likely originates from the 1500s when a thief had to actually lift the shop’s window to hand the stolen clothes to his companions through the window.

The first person specifically tasked with combating theft – a security guard in contemporary terms – was hired in the early 1700s. Professor Bamfield cites Robinson Crusoe’s author Daniel Defoe who used to be a merchant before becoming a writer. Defoe claimed in the 1726 magazine The Complete English Tradesman that shoplifting has become so widespread that merchants have had to hire additional staff to keep thieves at bay.

This was also when the first security systems were adopted – the goods were tied with fine steel cables to stop thieves from grabbing them. A ringing bell was attached to the cash drawer to inform everyone in the shop when an employee tried to steal cash, etc.

In 1880, a shop in Sainsbury implemented a system that may be considered the forerunner of CCTV – a shop clerk would sit in a box and monitor the shop; he would use a secret language (backslang, where words are pronounced backward) to warn the security guard when he noticed a thief.

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