The Challenges of Retail Loss Prevention in Mexico

A glimpse into the unique dilemmas faced by retailers in Mexico

In 2010 I was asked to speak at the annual retail loss prevention conference sponsored by ANTAD Mexico, Asociación Nacional de Tiendas de Autoservicio y Departamentales, or National Association of Supermarkets and Department Stores. Traveling to Mexico City, where the conference was held, was quite a treat since I had never been to Mexico City.

While I was very aware of the escalating drug-fueled violence in Mexico, I was not worried at all about making the journey. However, many of my friends and family expressed concern, which prompted me to seek out others who were familiar with the Mexican culture and customs and day-to-day living experiences.

At the October ASIS International annual seminar in Dallas, I had my opportunity when I was seated at a table with two Mexican security executives who live in Mexico and work for a U.S. auto manufacturer. When I expressed my family’s concern, I was expecting to receive reassurances that the fears were overblown and that I had nothing to worry about. The executives were quick to agree with me that I should not have any safety issues in Mexico…if I just practiced two common sense rules:

Rule 1—They said, “Carry two wallets on the trip to Mexico. Keep most of your cash and credits cards in a wallet in your room safe. It is okay to carry the second wallet with you, but with only a small amount of cash and maybe one credit card. That way, you can give a robber something so they leave happy and do not hurt you.” At this point, I was not feeling very assured.

Rule 2—”Only ride in taxis that the hotel calls for you. Or if you must hail a taxi yourself, only get in a taxi that other passengers are getting out of.” When I asked why, the executives calmly stated that there were many taxi drivers who would take you to a back street where their partners were waiting to rob you. The executives also assured me that it was okay to get into a taxi that other passengers were getting out of if they did not look scared or frightened, which meant they probably were not robbed.

While these recommendations were not very reassuring and heightened my anxiety, my walks around the downtown area of Mexico City were without incident. I have since found out that these issues with taxis in Mexico City have been going on for years. Like any large urban city anywhere in the world, travelers can be victims of crime if they are in the wrong place at the wrong time and don’t use common sense. [See “Protecting the International Business Traveler” July-August 2008.]

Unique Challenges

My conversation with the Mexican security executives provided me a glimpse into the unique challenges faced by retailers in Mexico. The headlines reflect a country plagued by violent crime and bloody gang turf wars. Even the long “off limits” tourist areas are feeling the effects. Last year, thirteen people were killed in and around the Mexican beach resort of Acapulco. Five of the victims killed were police officers and of the other eight victims, four were beheaded.

Kidnappings, gang assaults on businesses, cargo hijackings, brazen daylight robberies; these are just a few of the unique challenges facing retail loss prevention executives in Mexico. However, coupled with the challenges comes political corruption that is beyond comprehension here in the U.S. Policeman are either part of the gangs that rule the streets or are so poorly trained and under paid that their effectiveness is minimal in assisting with retail-related crime.

Worse, if the robbers and criminals are arrested, corruption within the judicial system allows the criminals to receive a greatly reduced sentence or escape prosecution altogether.

According to one retail loss prevention executive in Mexico, “Crime is going to happen. The challenge we face is how do we minimize the loss and the risks to customer and employees?”

ANTAD Conference

These and other topics were highlighted at the ANTAD retail loss prevention conference in Mexico City. The conference was a first-class affair and rivaled many retail loss prevention conferences in the U.S. The conference was broadcast via radio and podcast across Mexico. Also, a professional videographer filmed the entire conference in order to capture the valuable information on the ANTAD website for their members. Dr. Richard Hollinger of the University of Florida and I were the only two speakers from the U.S. Real-time translation services were provided to the attendees during our presentations.

Attendees at the ANTAD conference were from a wide range of retail segments, from small local chains to national chains with thousands of stores. Also represented were many American retailers, including Walmart and AutoZone. The vendors and suppliers that displayed their services and products in the vendor court were a mix of Mexican companies and a few U.S. companies, including Alpha/Checkpoint and ADT.

While the conference reminded me of similar events in the U.S., the challenges and issues faced by the retail loss prevention executives of Mexico certainly make our problems here pale in comparison.

One of the most popular speakers was a federal judge who spoke about her very personal fight against gangs and crime. Several years earlier, she was trying a case that involved a gang member. To persuade the judge to dismiss the case, the gang targeted the family of the judge and kidnapped and murdered the adult son of the judge. The judge was devastated at the loss of her son, but refused to be intimidated. Her strength, courage, and resolve led to the conviction of the gang member and the passage of new law against this type of crime. She received a standing ovation at the end of her presentation.

As with most conferences, the opportunity to network with peers and share best practices was extremely beneficial. The LP executives shared their philosophies and opinions about the role of retail loss prevention in retail businesses in Mexico today.

The Retail Loss Prevention Profession in Mexico

Many retail executives of Mexican-owned companies view retail loss prevention as a necessary evil and have little respect for the role. Carlos Lopez of AutoZone provided several theories for the reason loss prevention is not valued in Mexico. “Traditionally, many of the LP personnel, even at the highest levels, are former military personnel or from a law enforcement background. They want to ‘catch the bad guys,’ which is what they are most comfortable with, and they have not been provided training and education on the core business for whom they work nor have they received education on retail loss prevention best practices. Therefore, much of what they do is reactive and viewed as security, not true prevention of loss.” The situation sounds very similar to how our industry was viewed in the U.S. several decades ago.

Lopez began his career in operations with Walmart, which provided a very valuable education on the intricacies of operations. According to Lopez, “To truly make an impact on the bottom line of any retail chain, LP must be a proactive and integral part of the organization and understand all aspects of the operation from management’s point of view.”

During the conference, Lopez stated that he and his fellow Mexican LP executives desperately want to bring specific U.S.-based LP training and education resources to Mexico, such as Wicklander-Zulawski interviewing training, the LPQ and LPC certification programs, as well as LP Magazine.

When asked about retail loss prevention philosophies, an LP executive for a major department store stated, “A true LP executive must be a business person and understand the intricacies of the operation and, most of all, understand that the company is in business to make a profit, not to provide LP personnel with a place to work.”

ANTAD and their loss prevention committee are making great strides to promote this philosophy through education of the LP community as well as educational programs about retail loss prevention at other ANTAD retail executive conferences. Francisco Martin, director of program development for ANTAD, has a burning passion for LP and truly believes that retailers in Mexico need to embrace prevention. “Our goal at ANTAD is to educate, inform, and support our retail members in all aspects of their operation. Retail loss prevention is one of the key components to increasing profits and protecting assets, so at every opportunity possible, we stress the importance of having LP best practices in place.”

Some of those best practices include life safety measures to keep employees and customers safe from harm. This is an especially critical initiative due to an incident that occurred in November 2010 at a Coppel Department Store in the city of Culiacan in Northwest Mexico. Coppel has over a thousand department stores throughout Mexico.

The incident involved the death of six workers who were killed when a fire engulfed the store. It was during the night when the store was closed, and employees were stocking the store and performing inventory. According to news accounts, the doors were locked and fire fighters could not enter the store in time to save the employees on the upper floors of the three-story building. Vinyl substances, plastics, and other products that burned in the fire gave off smoke that killed the store employees. Mexico’s labor department says there were no fire detectors or emergency exit signs in the store. Coppel executives were quoted as saying that the supervisor in the store had a key and should have let the workers out. Coppel, which did not have an LP department at the time of the incident, is now creating one.

Violent Crime

But the overwhelming issue facing retail loss prevention executives in Mexico is violent crime, which is in the news and creating a climate of fear in the resident population, visitors, and business community. Executive kidnappings have forced LP executives to become expert in providing executive protection for their management team. Such kidnappings are not for political reasons, but for plain, simple greed.

AutoZone’s Lopez stated that LP has come a long way over the years from when he first started in the business. “Back then, we did not even have executive protection programs in place. Now, every company must have a plan to keep their executives safe since kidnapping is a very real threat to the executives and the company.”

One of the largest convenience store chains in Mexico is OXXO (pronounced O-X-O) with over 8,000 stores across the country. As one can imagine, robbers who look for quick access to cash frequently target OXXO stores. Robbers with weapons ranging from handguns to assault rifles will burst in and demand cash. According to LP Director Pedro Dávila, “We know that we cannot stop the robberies altogether, but we can take proactive measures to reduce the risks to our employees by minimizing the amount of cash available to the robbers.” While this does appear to reduce the losses at OXXO, it is somewhat disheartening that it simply drives the gangs to other retailers.

This philosophy seems to be pervasive among the retail loss prevention executives in Mexico. Another LP executive who did not want to be named, stated that one of his main goals is to allow the robbers and thieves to get away with a minimal amount of cash or product. But again, he was quick to point out that the threat of violence requires that the robbers and thieves be permitted to leave with something. “If we lock every item down or put it behind steel-reinforced cases, the criminals will just escalate their violence until they can get something during the attack.”

The chain where this particular LP executive is employed has some very unique LP merchandising strategies for their high-end products that allows some modest amounts of merchandise to be taken while securing the vast majority of product. For obvious reasons, the specific items where this merchandising strategy is employed cannot be identified.

Of course, every retail loss prevention executive has an overwhelming desire to keep their employees and customers safe during any attacks. The Mexican LP philosophy, like that in the U.S., is that the attackers should never be confronted so that they will leave as soon as possible without harming employees or customers; again, minimizing the loss and getting the attackers out as quickly as possible. While most agree that employees should never fight or resist an armed robber, OXXO’s Dávila , frustrated with the seemingly never-ending attacks by gunman lamented, “Perhaps if our employees were allowed to carry weapons, the robbers would think twice about robbing our stores.”

[AUTHOR’S NOTE: As this article was being written, four Walmart employees in Layton, Utah, were terminated for overpowering and disarming a shoplifter who pulled a gun when confronted by the employees. The terminations were based upon Walmart’s policy entitled “Investigation and Detention of Shoplifters,” which instructs employees to retreat if an individual brandishes a weapon. This is an age old dilemma. Employees who successfully disarm assailants are viewed by the public as “heroes” while their employer views the actions of the employees as negative because the employees put themselves and the public in harm’s way. In this recent case, the actions of the employees resulted in a positive outcome. However, had they failed in their counterattack, the outcome could have been devastating. This dilemma will surely rear its head again and again.]

Technology

One Mexican retailer is fighting back against crime using advanced technology that helps identify the criminals before they strike. In all areas of the store, CCTV is utilized. However, in select high-risk areas, the store additionally utilizes facial-recognition technology to identify potential threats.

“If a person is walking around an area for a period of time, leaves and comes back within a given period of time, our facial recognition program alerts our in-store LP staff,” stated the LP executive. The LP staff is highly trained on how to properly and effectively approach the suspected criminals in order to defuse the situation and prevent the attack.

Another unique example of the effective utilization of technology by this particular retailer involves refund fraud. The philosophy of this retailer is much like Nordstroms, here in the U.S.—good customers can return any and all products without a receipt or question. Except with this Mexican retailer, they do require the customer place his or her finger on a biometric scanner.

According to the loss prevention director, “We take the philosophy that all customers are good and treat them as such unless we identify them as otherwise.” This identification comes in the form of a proprietary database that holds the fingerprint of any customer or employee who has ever been arrested for crimes against the retailer. Just prior to a detained shoplifter or employee being transported from the store by the police, their fingerprint is taken, and the biometric information is entered into the retailer’s database. If a customer returning merchandise is in the database, they are barred from returning merchandise unless a receipt or proof of purchase can be produced.

But there are challenges in properly deploying technology in Mexico according to Carlos Agami Zaga, national sales director for Agasys, a supplier of CCTV and monitoring systems. “In Mexico, there are many companies like ours who believe in installing quality security systems and educating our customers on the properly utilization of their systems to its fullest to maximize their investment. However, many security vendors only want to install the system as quickly and as cheaply as possible with little, if any, instruction or direction to the retailer. The retailers who purchase these substandard systems are then hesitant to upgrade or change systems in the future for fear of wasting more money.”

Major Reasons for Crime in Mexico

Statistics exist that indicate that the rate of violent crime, including kidnapping, is decreasing in Mexico, and that these rates in other Latin American countries are actually higher than in Mexico. But this is of little solace to the LP executives charged with protecting profits and people in Mexico. The reasons for the unacceptable violent crime rate are many, but a starting point is the low-risk, high-reward scenario in Mexico. This is exacerbated by the socioeconomic environment not unlike other countries where the poor are getting poorer and feeling increasingly frustrated.

Secondly, as mentioned before, the police are under-trained, under-paid, and under-equipped to handle the escalating crime problem in Mexico. Mexico City’s urban population is estimated at 20 million, which is comparable with New York City. However, Mexico City’s police force is only two-thirds the size of New York City’s and policemen earn less than a quarter of what their U.S. counterparts earn. This may be why many officers turn to corruption to augment their pay.

According to stories from everyone from taxi drivers to retail loss prevention executives, members of the police are themselves sometimes involved in criminal activities such as “shaking down” truckers and other motorists traveling on rural highways. But it is the bribes and flow of easy cash that causes some members of the police to turn a blind eye or protect the criminals and even participate in gang activity. According to multiple Internet resources, the police are often presented with the option of choosing “Plata o Plomo,” which means they can either accept a bribe (plata = silver) or they will be killed (plomo = dead).

According to the Comisión Nacional de los Derechos Humanos (National Commission on Human Rights), only one out of every ten crimes is reported in Mexico. This is due to lack of trust from citizens regarding the authorities. Furthermore, only one out of 100 reported crimes actually goes to sentencing. This means that one out of every 1,000 crimes is punished. There are roving gangs of armed young men attacking businesses with impunity because the risk of getting caught or punished is far less than the rewards they reap from robberies.

Thirdly, and probably the core of Mexico’s crime problem, is the rampant drug trafficking fueled by the insatiable hunger for cocaine, heroin, and marijuana in the U.S. With the untold billions to be had by the drug cartels, comes corruption of every level of civil service, government, and political leadership.

Advancing Retail Loss Prevention in Mexico

Of the many people interviewed for this article, several refused to be identified for fear of reprisals…and rightfully so. One LP executive relayed a case where they caught an employee stealing and had a solid case. When the case was presented to the magistrate, the magistrate chastised the retailer for bringing the case to court and dismissed the charges. The magistrate was not required to explain why the charges were dismissed.

Executives told of other cases that made direct connections between local politicians and criminal activity, such as hijacking of trucks, cloning of credit card numbers, and others. However, for the sake of the many retail companies who relayed information, the specifics of these disturbing stories cannot be shared publically.

Suffice it to say that ANTAD and their retail loss prevention committee are continuing to advance the role of retail loss prevention in Mexico with education, training, and awareness balanced with the overwhelming need to protect property and people in an extremely challenging environment.

In just the few short months since October 2010, some of the “wishes” of Carlos Lopez of AutoZone have started to take shape. Wicklander-Zulawski conducted their first Spanish training class in November 2010. LP Magazine is in discussion with ANTAD about providing editorial content for a web portal project in Mexico. And the Loss Prevention Foundation is exploring the feasibility of offering their LP certification programs in Spanish.

Sidebar: ANTAD Mexico

ANTAD Mexico, Asociación Nacional de Tiendas de Autoservicio y Departamentales, or National Association of Supermarkets and Department Stores, is the primary retail trade organization in Mexico. ANTAD supports 101 retail chains in Mexico with over 17,000 retail locations and 650,000 employees. When you add in the vendor and supplier community that ANTAD supports as well, the number of employees they impact reaches well over 2.5 million people in Mexico.

Like trade organizations in the U.S., ANTAD focuses on education and training for their membership while also representing retail interest in governmental affairs and legislative matters. For example, Mexico has imposed a fee to retailers on the use of plastic bags, and ANTAD is attempting to help companies convert to alternative solutions, such as recyclable, ecologically friendly bags.

An overarching initiative of ANTAD is to promote “sustainability and recovery” in the event of crisis situations, such as hurricanes, earthquakes, floods, fires, and other disasters. ANTAD is promoting retailers as critical to the Mexican infrastructure and the communities in which they serve when a crisis occurs. In order to help the communities, retailers must be given first consideration when deciding where to restore power. Also, trucks sent by retailers with relief supplies must be allowed access into the affected areas.

Regarding loss prevention initiatives, ANTAD has developed an annual survey of the primary security concerns of the membership and last year, a phenomenal 80-plus percent of their membership participated in the survey. The survey mirrored many of the concerns in this article about violent crime and criminal activity, especially robberies, hijackings, and kidnappings.

ANTAD is committed to the profession of loss prevention and the ANTAD loss prevention committee though the development of education programs and informational seminars and conferences for LP executives. By partnering with vendors and suppliers, ANTAD exposes LP executives to innovative technological solutions and cutting-edge tools that can help keep retailers profitable while protecting employees and customers in the challenging environment of Mexico.

This article was first published in 2011 and updated in April 2016.

Comments
  • This is total bull. I’ve lived in Mexico for more than 20 years and never have I heard of a taxi carrying a person in the back to rob you. Neither has the drug violence ever reached Mexico City. It is xenophobia like this that causes foreigners to be paranoid about Mexico City. Just don’t be a dumb tourist and you’ll be fine, same as in any country in Europe, say.
    Stop spreading false rumours.
    PS. I stopped reading your article when I read that, so I can’t comment on the rest of it, really.

    Reply

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