Breaking News in the Industry: December 23, 2016

Season of giving is also the season of taking

Christmas is known as the season of giving, but local retailers are fully aware the season of taking is also in full swing. According to a recent forecast by Checkpoint Systems, shoplifting as a percentage of sales hits it peak during the holiday season as thieves, including some retail employees, target more expensive merchandise as shoppers fill the stores. Evidence of the trend is apparent in Greeneville, where loss prevention staff at stores like Walmart are on the lookout for shoplifters around the clock.

Shoplifting is a $6 billion problem for retailers during the holidays, according to Fortune.com.

Figures from law enforcement agencies compiled by the Tennessee Bureau of Investigation show there were 37,990 reported instances of theft-shoplifting statewide in 2015, compared to 36,791 theft-shoplifting reports in 2014. The Greeneville Police Department investigated 202 shoplifting reports in 2015, up from 161 in 2014. The Greene County Sheriff’s Department investigated 27 shoplifting cases in 2015, compared to 31 in 2014. Checkpoint Systems report author Ernie Deyle wrote that shoplifters are more likely to rationalize a theft during the holiday season. “It’s much easier to do so when a child’s Christmas present is at stake rather than an extra bathing suit for the summer,” he wrote.

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Local Incidents
This week alone, at least three shoplifting incidents were reported by Walmart loss prevention employees to Greeneville police. Between 2:17 and 3:11 a.m. Tuesday, a white female entered the store at 3755 E. Andrew Johnson Highway, selected about $200 worth of miscellaneous merchandise, put the items in a shopping cart and then pushed the cart out of the store without paying, Greeneville police Lt. Alan Dotson said in a report. That theft remains under investigation.

At 7:08 p.m. Monday, a man later found to have previously been banned from the Greeneville Walmart for prior thefts entered the store, selected $35 worth of merchandise and left without paying for the items, a report said. Warrants for theft under $500 and criminal trespassing were taken out against the man.

Between 8:39 and 10:14 a.m. Monday, police investigated another report of shoplifting from Walmart. Video surveillance shows a woman pushing a shopping cart out the store front door without stopping at the cash registers, Dotson said in another report. The cart “was filled with $1,000 in merchandise,” the report said.

Walmart is by no means the only retailer affected by shoplifting. The holiday shopping season, which begins in early November, generates 34 percent of annual sales for retailers and also 37 percent of annual “shrinkage,” defined as inventory loss for all reasons — from supply chain inefficiency, to employee theft to shoplifting, according to Fortune.com. The latter two categories account for the majority of shrinkage, the website reported.

A December 2014 article stated that retailers “should work just as hard at keeping the profit from each sale as they do making that sale.” Crime rates for property crimes, burglary and theft including shoplifting increase dramatically during the holiday season.

A 45-percent increase has been reported in some major U.S. cities.

Key findings of the 2016 National Retail Federation’s National Retail Security Survey include three conclusions. First, the impact of shrinkage on the retail industry continues to be sizable, that most retailers rely on loss prevention professionals to apprehend shoplifters, and that shoplifting has surpassed employee theft as the greatest cause of inventory shrinkage. It’s common knowledge that major retailers like Walmart make extensive use of video surveillance cameras to identify and apprehend shoplifters. But Walmart and other loss security employees are reluctant to discuss other specifics of security measures used to prevent shoplifting. Questions on the topic directed to Walmart corporate headquarters in Bentonville, Ark., were not immediately returned.

The article includes tips to loss prevention associates to help reduce shoplifting. Such employees should be well-trained “and equipped to deal with increased customer volume levels.” Loss prevention professionals should be encouraged “to be more omnipresent in stores and on the sales floor,” sending a clear message to associates and customers alike that they “are taking a leadership role in the protection of your store.” “Would-be thieves have become adept at suspecting who is a store detective. Once they see that (store) loss prevention folks are out and about, they will move on to easier pickings,” the article states.

Another suggestion is to “reduce the reward for opportunistic criminals to conduct ‘snatch and grab’ register theft by practicing good cash control.” “Keep minimal funds in the register (and) call for continuous cash pickups by your loss prevention team or place excess funds in a drop safe. Employees should be taught to recognize indicators of genuine U.S. currency to prevent the use of counterfeit money[Source: The Greenville Sun]

Man who crashed into Trenton woman fleeing shoplifting incident arraigned on murder charge

A man who has been jailed for months following a car crash that killed a Trenton woman finally has been arraigned. Thomas Peterson, 36, was arraigned Dec. 21 before 33rd District Judge Michael McNally. He has been charged with second-degree murder, reckless driving causing death, fleeing and eluding police and operating while impaired.

All are felonies and Peterson faces up to life in prison if convicted of the second-degree murder charge. A probable cause conference is set for Jan. 3 and a preliminary examination of the evidence against him will be held Jan. 10. A cash bond of $200,000 was set. The Department of Corrections took custody of Peterson from the onset. Nicole Cutting, 27, of Trenton, died at about 5:30 p.m. Aug. 2 when her 2012 gold Chevrolet was struck by a black pickup truck driven by Peterson on Allen Road near Dix-Toledo Road in Brownstown Township. The crash occurred just after Petersen fled from Meijer with Katie Michelle Chinavare, 33. She was detained at Meijer for shoplifting, but broke free from store security and jumped in the car with Peterson and fled. As the two drove from the store, police were alerted to the theft and were on the lookout for the vehicle. Once they were spotted, an officer attempted to follow them, but Petersen eventually crashed into Cutting’s car. Chinavare was charged only with shoplifting, a misdemeanor. A person who commits a crime that ultimately results in someone’s death caused by a third person can sometimes be charged in connection with the death. However, the initial crime has to be committed in commission of a felony. At the time Cutting was killed, Peterson was a parole absconder and Chinavare had active warrants for her arrest.  [Source: News-Herald]

Retailers go into 2017 with too many stores

U.S. retailers have a problem they can’t easily resolve: They have too many stores. And even though they’ve already announced slews of store closings, it’s increasingly likely they’ll have to shutter even more over the next few years. That’s especially the case as consumers keep shifting their spending online, which has left the U.S. awash in unwanted retail space, or “overstored.”

According to real estate information firm CoStar, nearly 1 billion square foot of retail space will be “rationalized” in the coming years through store closures and conversions to other uses. Many retailers also are seeking rent reductions as their productivity has slumped from an industry average of $330 in sales per square foot from $350 per square foot a decade ago.

The level of “overstoring” may only get worse. Retail analyst Jan Rogers Kniffen expects about half of all retail sales to be online by 2030, a huge increase from current figure of about 10 percent.

“A lot of these retailers are still in denial,” said Brian Yarbrough, a retail analyst at Edward Jones. “I think the Kohl’s, the J.C. Penneys of the world, they’re in denial. At some point, there’s probably not a need for 2,400 Kohl’s and J.C. Penney’s across the United States. There’s probably not a need for 5,800 Walmart Supercenters.”

Officials from J.C. Penney didn’t immediately respond to a request for comment for this story. A Kohl’s spokesperson declined to comment beyond pointing to executive statements on earnings conference calls about “the importance of stores.” Walmart spokesman Randy Hargrove said the company doesn’t comment on analyst reports, but he noted that in October Walmart U.S. CEO Greg Foran said “next year you will see us put more capital allocation towards remodels versus new stores.” Hargrove added: “We still see a need for supercenters.”

Another major chain facing significant overstored conditions is Sears Holding. The struggling retailer has been closing stores and unloading assets for years to bolster its finances. Here’s a closer look at how these chains are dealing with store closings.

Macy’s – The country’s largest department store chain announced plans in August to shutter 100 underperforming locations in 2017, about 15 percent of its brick-and-mortar footprint. Macy’s shed 41 locations last year and axed thousands of employees. Terry Lundgren, who had led the retailer for more than a decade, will step down next year from the CEO spot and become executive chairman.

Kohl’s — After a rocky start to 2016 when it announced 18 store closures, the Wisconsin-based no-frills retailer rebounded and reported better-than-expected results in its most recent quarter. Kohl’s, though, continues to struggle. Comparable-store sales in its latest period fell 1.7 percent, the third straight decline in this closely watched retail metric of sales at stores open a year or more, a worrisome sign for Wall Street.

J.C. Penney — CEO Marvin Ellison made headlines in March that when he told Fortune he wouldn’t undertake “any wholesale closings of stores in its 1,020-location fleet,” though it did shutter seven locations. The Plano, Texas-based retailer operates almost as many stores as it did in 2006, but its annual sales were roughly $7 billion higher back then than they were last year. Ellison told the magazine that Penney’s future lies in e-commerce and physical stores working together.

Walmart — With cost pressures in mind, Walmart said in January that it would close 269 stores around the world, including its small-format Express locations that were designed to compete against the dollar stores that have taken market share from the giant in recent years. Rising expenses are weighing on the world’s largest retailer, which raised the salaries of thousands of hourly employees last year and unveiled a plan to spend billions on expanding its e-commerce operations

Sears Holdings — The Hoffman Estates, Illinois-based company has been floundering for years under the control of hedge fund tycoon Edward Lampert, who arranged the merger of Sears and Kmart that created the current company more than a decade ago.  This year it announced the shutdown of 68 Kmart stores and 10 Sears locations and accelerated the closing of 50 locations at the beginning of the year. Sears has indicated that more stores may be shuttered. “I am hard-pressed to imagine a scenario where Sears as constituted as anything we have known it will be around in 2018,” said Jason Ankeny, editor of Retail Dive, a trade news site. He added that the Sears and Kmart brands “don’t have any relevance and value for millennial consumers.” A Sears spokesman told CBS MoneyWatch critics underestimate the company. Said spokesman Howard Reifs: “We believe that we have sufficient resources to fund our transformation and meet all of our financial obligations.”The issue for all the big retail chains, however, remains a tough one: Just how many stores will they really need as shoppers increasingly put things into their shopping carts — digitally.  [Source: CBS News]

Suspect arrested in two violent shoplifting cases

Richmond Police arrested a man in connection with two separate violent shoplifting cases in Fayette and Madison counties. Shaun Smith faces two robbery charges. According to his arrest citation, Smith is accused of pulling out and swinging a knife at a Kohl’s employee in Lexington on November 5.

His girlfriend, Helen Lucas, was trying to shoplift items from the Kohl’s when a loss prevention officer tried to stop her, according to court documents. The pair stole $548 worth of merchandise from the store according to the citation. One day earlier, police say Lucas and Smith tried the same scheme at a Belk’s store in Richmond. The citation states Smith held a knife and demanded the loss prevention officer let go of Lucas when he tried to stop her. The pair allegedly got away with $289 worth of merchandise in this case. Smith was arrested on Wednesday and Lucas was arrested on shoplifting charges last week.  [Source: WKYT.com]

Consumers open more than half of retailers’ emails on smartphones in Q3

Another 13% of emails were opened on tablets, while only 36% were opened on desktops. 64% of retailers’ emails were opened on a mobile device in the third quarter—13% on tablets and 51% on smartphones—according to the new Experian Marketing Service “Quarterly Benchmark Report.” That’s up from 61% of retailers during the same period in 2015—11% on tablets and 50% on smartphones.

There’s a strong negative correlation between consumers opening retailers’ emails on mobile devices and click rates, as consumers on mobile devices are less likely to click on links within an email, the report finds. Across all industries, total clicks have declined year over year for each of the past four quarters. Within retail, the click rate fell to 2.7% during the third quarter from 2.9% a year earlier.

The report finds that retailers’ email volumes continue to rise; retailers sent 16.3% more emails in the third quarter than they did a year earlier. And that’s on top of a 27.6% jump in email volume in 2015’s third quarter. Those trends are likely to continue in the fourth quarter as data from digital marketing vendor eDataSource suggests that email marketing volumes have significantly risen this holiday season.

Even so, that volume increase hasn’t hurt retailers’ unsubscribe rate, which fell slightly to 0.09% from 0.1%. That may be because retailers like Amazon.com Inc., No. 1 in the Internet Retailer 2016 Top 500 Guide, are increasingly focused on segmenting their customer base according to what customers have bought and looked at on their sites and apps, and then delivering email messages tailored to their specific interests and preferences.

Experian also notes that retailers’ unique open rates—which is a measure of the number of unique subscribers who have opened a retailer’s message—fell to 14.6% from 16.6% a year earlier. But even though the overall unique open rate was down, roughly half the retailers that Experian examined in the report had statistically significant increases in their click rates.

Consumers like to hear from retailers via email, according to another survey from marketing technology Zeta Global—which rebranded from Zeta Interactive in October—and the Relevancy Group. The survey of 1,000 consumers, finds that 93% say email is their preferred communication.And on some of the largest online shopping days of the year, namely Black Friday and Cyber Monday, more than half of all email clicks took place on mobile devices.  [Source: InternetRetailer]

 

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