A Culture of Tradition and Change: Loss Prevention in Japan

Retail is a global concept, and retail losses are a global problem. But across the globe, are the ways that we approach retail losses the same?

Often when we discuss the differences in the way that loss prevention programs operate, we refer to the importance of functioning within the culture of the company and how that internal culture will impact the way that we approach both the goals and focus of our responsibilities. This can create subtle but important differences that distinguish one loss prevention department from another, driving the way that each program attempts to accomplish our shared mission. Yet with all of these subtle variances that occur within our own culture, how differently might loss prevention efforts be managed in retail organizations across the world?

Japan has always had a reputation for its fascinating, distinctive traditions. As an island nation with a long history of isolation, many aspects of the culture are immersed in a rich history and deep traditions dating back thousands of years. On the other hand, it is a country that continuously pushes new trends in areas such as fashion, architecture, performing arts, animation, technology, and the boundaries of what is possible. This unique blend is part of what makes it such a captivating culture and certainly one of the most unique countries in the world.

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Yoshinori Inamoto
Yoshinori Inamoto

To learn more about loss prevention in Japan, LP Magazine recently spoke with Mr. Yoshinori Inamoto, CFE, CASE, president of the Japan Association of Electronic Article Surveillance Machines (JEAS) and deputy director secretariat of the NPO National Shoplifting Prevention Organization (NSPO) of Japan.

LPM: Mr. Inamoto, can you provide us with a brief history of your background?

Mr. Inamoto: I started my professional career at Aoki Holdings, Japan’s largest men’s suits specialty store chain, where I served as a supervisor. While with the company I was promoted several times to positions including director of human resources, educational promotion, and internal audit.

In 1997 I joined the Takachiho Koheki company, where I established the MSR (management support representative) team and served as deputy general manager with the security service department while also holding a senior consultant position. Since being stationed with the corporate strategy division in 2011, I have also been involved with both the NSPO and JEAS Associations.

LPM: Please tell us more about the Japan Association of Electric Article Surveillance Machine (JEAS) and the National Shoplifting Prevention Organization (NSPO) in Japan.

Mr. Inamoto: The Japan Association of Electronic Article Surveillance Machines was established in June 2002 as a trade association for companies that manufacture, sell, and support anti-shoplifting systems. By liaising with government agencies and related industry groups, we work to promote sound management of the distribution industry and to play an industrial and social role in preventing delinquency and shoplifting committed by elderly people. In 2018, JEAS became an industry association for electronic product monitoring equipment and security cameras. In partnership with members from face-recognition manufactures, security businesses, and retail support fields, we have grown into the only solution organization that promotes the prevention of store crimes, such as shoplifting, and the prevention of losses in Japan.

The NPO National Shoplifting Prevention Organization was established in 2005. Property crimes, especially shoplifting, have rapidly increased at retail and service stores in Japan in recent years. With the damage, maliciousness, organization and internationalization involved with these incidents on the rise, such crime has been widely reported in newspapers and other media, and has changed from a management problem of the retail and service industry to a major social problem entailing such issues as the sound rearing of children and the maintenance of community safety. These problems must be addressed immediately, on a society-wide basis, and is part of our core mission at NSPO.

LPM: In general terms, how are loss prevention responsibilities typically handled within Japanese retail stores? Is there a dedicated loss prevention team, or is this managed in some other way?

Mr. Inamoto: Very few retail chains in Japan have a dedicated loss prevention team, and those that do will not have a large team. In the companies that do support a loss prevention team, they will typically only carry 3 people or so.

Research conducted by the consulting and researching agency Japan Retailing Center indicates that only 26.9 percent of major retail chains in Japan research the cause of loss, while 23.1 percent of major chains do not have any systematic research at all. 72.6 percent of chains report that the store manager is responsible for loss prevention, while 13.7 percent indicate that it’s the area manager or zone manager’s responsibility. 5.2 percent say the general manager of store operation is responsible, while 9 percent did not identify anyone as having that specific responsibility.

As you can see from this research, loss prevention in retail stores is largely dependent on the quality and motivation of the employees and store managers. Therefore, in many cases no systematic analysis of loss measures and comprehensive measures have been taken or is available. Some retailers believe that it is inevitable that there is some shoplifting loss, but they have not taken any significant measures against shoplifting or loss. Even if a shoplifter is caught, it can take nearly two hours on average to report the incident to the police and have them respond. Therefore, many stores just let the shoplifters go after a stern preaching. As a result, this has led to a vicious circle that increases the rate of shoplifting recidivism.

LPM: What do you feel are the primary contributors to retail loss in Japan?

Mr. Inamoto: The National Shoplifting Prevention Organization (NSPO) conducted a survey in 2018 and created a report about retail loss and the status of store security in Japan. The results of that survey reported estimated retail loss rate of 0.42%. According to survey participants, they listed contributing factors as shoplifting at 56.4%, operational errors at 28%, unknown causes at 9.5%, internal theft at 5.4%, and vendor fraud at 0.7%.

LPM: Do you feel that there is a significant organized retail crime problem in Japan?

Mr. Inamoto: Organized retail crime is considered an ongoing, substantial, and consistent threat in Japan, especially in major cities. In many cases, the damage caused by a single organized crime incident at a retail store will result in losses exceeding one million Japanese Yen ($10,000 US dollars). We’ve started to see more sophisticated methods and tools by ORC groups in recent years. For example, the use of well-made booster bags has become a prominent method used to commit these crimes. The damage resulting from organized retail crime and the number of stores that are being targeted has shown a considerable increase, with chain drug stores and fashion merchandise consider amongst the primary targets.

LPM: What do you feel are the things that are done well in Japan to deal with the loss prevention concerns in the country? What do you see as the area of greatest success?

Mr. Inamoto: Retail chains that have a loss prevention staff dedicated to analyzing the causes of retail loss and reporting those results to top management have proven to be the most successful. Such companies invest in building a strategic plan to combat losses by creating work processes and improving standards using the Plan-Do-Check-Act (PDCA) cycle to achieve results.

Other companies are finding success by building an emergency network between stores in the event of organized retail crime incidents to communicate ongoing risks and help prevent further incidents in neighboring stores.

Finally, among the most successful companies are those that hold loss prevention study sessions and build a network of loss prevention professionals within the retail community as well as different industries that may be experiencing similar problems.

LPM: What do you see as the greatest area of growth/opportunity for the loss prevention function in Japan?

Mr. Inamoto: Most importantly, I believe that building an educational system similar to the LPQualified and LPCertified programs created by the Loss Prevention Foundation, to include training and development on statistical analysis, will improve the human resource development of loss prevention professionals in Japan. Currently, NSPO is preparing a Japanese version of the loss prevention education system. I am currently one of the members developing these textbooks.

Further, I believe that it is important to further review the value of technological tools such as electronic article surveillance (EAS) and the effective use of facial recognition systems, which is becoming popular, and implementing these tools to support security personnel in the stores. I believe the companies that develop and implement these support mechanisms will find success in the next era of retail.

Finally, it is important to promote both security information sharing and personal information protection. I feel that information that can be made public should be made available to residents so that local people can cooperate to establish a safe and secure society.

LPM: How do you see loss prevention responsibilities in the retail setting evolving over the next 5 – 10 years in Japan?

Mr. Inamoto: In Japan, where the population is declining and aging, especially in local areas, the hiring of retail store staff is becoming increasingly difficult. Retailers rely on foreign workers for the shortfalls in staffing, but due to the lack of proper immigrant systems, this has not been as successful as we would like. Some of these individuals have been recruited by organized retail crime groups or internal fraud has occurred. There must be an environment where foreign workers can work with peace of mind in the retail setting.

Every year in Japan, floods occur frequently due to global warming. Also, there is the ongoing danger of a large earthquake, and retailers must be appropriately prepared for it. In order to deal with these risks with fewer people than before, it is necessary to review both the store crisis management system and the measures taken to avoid losses in the event of such a crisis.

I believe that Japanese society needs more diversity. More specifically, I feel that it is time to pursue rich diversity, with the goal of “living together” and “leaving no one behind.” This would greatly benefit the loss prevention culture.

To promote growth and change, I use Dr. Hayes’s book and LP Magazine as study references for a monthly learning session held with LP specialists from area retailers. I will continue to hold LP study sessions with the spirit of “learning together.”

The team at LP Magazine would also like to share our sincere gratitude with Mr. Yutaka Ichimura for his assistance as a liaison and translator in helping to make this interview possible.

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