Getting Ahead of the Grinch

The holiday season is the busiest time of the year for many retailers. Events such as Black Friday present major loss prevention and security challenges. Holiday-related issues such as having more of the latest and hottest products on hand, the mandatory push for sales and specials, the increasing customer traffic, the influx of newly hired associates, and stretched resources can make retailers more vulnerable to shrink and retail crimes than at other times of the year. Specifically, opportunities for shoplifting and fraud are likely to increase in and around the holidays.

To understand these concerns, we interviewed seven experienced LP leaders from six major brick-and-mortar retail sectors, including apparel, accessories, and footwear; entertainment and recreation; food, drug, and alcohol; general merchandise; home and garden; and specialty. On the condition of anonymity, we interviewed each practitioner and asked when they begin their holiday preparations, what product protection and fraud concerns they had for this upcoming season, how they plan to address those concerns, and what advice they had for other retailers.

Holiday Preparation

The retailers identified two key considerations related to preparation, including when merchandise decisions are made, and when LP decisions are made. Each has implications for product protection and fraud prevention. From a merchandise perspective, planning begins much earlier than LP planning. A home and garden retailer and a general merchandise retailer begin planning what merchandise to order and have in stock about a year in advance. Another told us they begin making merchandise-related decisions for the following year after the current year’s holiday season.

Turning to LP, the retailers reported different lead times, usually a few months before the holiday rush. For example, a few retailers begin preparing in October for a November and December rush. Others begin making decisions at the end of the summer. One retailer representing the home and garden sector reported a much longer lead time, beginning preparations about nine months before the holiday. Interestingly, we found preparations vary by product offering. For instance, retailers that must make additional preparations for a holiday such as Halloween may experience greater difficulty preparing for other holidays and may have to push their preparations earlier in the year.

Product Protection Concerns

Our interviews revealed several concerns related to product protection during the holidays. These concerns primarily revolved around merchandise location, changing protection needs, the effect of protective devices on shopper friction, and the potential for greater, more violent organized retail crime.

1. Moving merchandise from secure to vulnerable locations. One concern on many LP practitioners’ minds is having to move valuable merchandise from secure locations in the store to vulnerable locations. The holiday season is a time of “buy one get one,” clearance sales, new promotions, and other advertising blitzes designed to move merchandise at higher volume. This requires making more products available and visible. Products that were previously secured, such as in locked cases, now may need to be moved to more vulnerable places, such as end caps. Not only does that make products more accessible to customers, but it also makes them more accessible to thieves. It requires rethinking pre-existing product protection regimens to adapt to the new locations.
2. New merchandise requires new protection strategies. Additionally, the holiday season is a time to introduce new products. Unfortunately, this creates headaches for retailers who now must rethink their product protection schemes. A retailer may have to temporarily rely on an untested product protection solution rather than a tried-and-true method.
3. Many product protection approaches generate additional friction. Moreover, the relationship between more stringent product protection solutions and customer friction has always required a delicate balancing act. Some of the retailers we spoke with reported this issue is even more pronounced around the holidays. Often the problem is exacerbated by the high volume of merchandise, in various shapes and sizes, in new locations, and needing myriad protection methods.
4. Many retailers report aggressive and serious retail crimes increase during the holidays. Some retailers felt ORC activity increased during the holiday season as well. Even more alarming, they felt ORC groups tended to be more violent. Possibly the increased customer traffic and overall frustration were to blame.

Overcoming Product Protection Concerns

Fortunately, there are solutions to these concerns, and the retailers we spoke to offered approaches they use in their stores. This included increased awareness training for sales associates, increased and enhanced opportunities for customer service, developing a merchandise game plan, and avoiding the temptation to lock everything up.

Increased awareness training for sales associates.

Several retailers felt training was an important piece of the product protection puzzle. Specifically, associates should receive additional training on problems that are more common around the holidays, such as robbery and theft‑related violence. The “See something, say something” mantra is key because associates may feel rushed due to the increase in customer traffic. Therefore, unusual behaviors may be ignored, downplayed, or go unreported. One retailer stressed employees should also be told to trust their instincts and avoid the temptation to rush through transactions. He rationalized this position by explaining that thieves and fraudsters look to capitalize on the high volume and associated speed.

Another retailer also stressed being patient with sales associates. Realize you are hiring a lot of new associates around the holidays who may be inexperienced. They may not have LP backgrounds and be unaware of suspicious or unusual behavior. They also may be more vulnerable and susceptible to being scammed. Train them and provide them with the tools to be successful.

Increase and enhance opportunities for customer service.

The holiday season is a time for hiring new associates. Plan to have adequate numbers of associates on hand to help customers unlock cases or remove EAS tags. It may be worthwhile to hire greeters for entrances, or even have a visible security presence at entrances in your high-risk stores.

Develop a merchandise game plan.

Given the influx of merchandise, including new products, it is important to plan. Communicate with your merchandizers to find out what products they are shipping, and cross-reference this information with your shrink data to identify high-risk SKUs. Then, develop plans to protect those SKUs. Last, communicate to stores what the protection needs are. For example, explain and illustrate how to properly tag products, how to ensure tagging is done correctly, and which products to lock up.

Realize there is potential for noncompliance given the holiday rush. Noncompliance occurs when a sales associate does not adhere to a security procedure. For instance, your store may require associates to retrieve certain high-value products from a locked cabinet. If an associate does not properly lock the cabinet, that is noncompliance. While noncompliance can occur at any time, there is a higher risk around the holidays for two reasons. First, as stressed earlier, you will likely be hiring many new employees. New employees may not be familiar with security protocols, at worst, or feel uncomfortable with them, at best. Second, the need for increased efficiency among all sales associates means they may not take the time to ensure a tag is properly applied or that a case is relocked after retrieving a product.

Avoid the temptation to lock everything up.

One retailer stressed keeping things accessible to customers to reduce friction. This can be achieved by using less intrusive product protection solutions, such as EAS, or using “smart shelf” type solutions that keep products available yet will alarm in the event of a shelf sweep. If locking cases must be used, consider leaving them unlocked (a deterrent effect may still be achieved for opportunist shoplifters), or having them alert if the door is left open for too long or in the event of a shelf sweep. However, keep in mind that some offenders, specifically those who are more motivated, may see the unlocked cases as a weakness to be exploited. Offenders may also intentionally look for open cases simply by trying the handles. Some offenders may even bank on the possibility of noncompliance by busy associates who forget to relock cases.

Advice for Preparing for the Holidays

Last, we asked the retailers for advice on preparing for the holidays. All stressed planning to some degree. For greater specificity, we asked what they should plan for. The following list represents some of the most critical considerations. Your game plan should include your key partners: merchandizers, operations, and LP.

Staffing: Ensure levels are adequate.

Product Protection Solutions: Ensure you have enough of the right tags, detachers, and protective cases for merchandise you will receive.

Product Placement: Consider where high-risk products are placed and how this affects product protection. For example, placing products at the front of the store increases visibility for sales and may enable associates to watch them more closely; however, it also reduces the time and effort required for offenders to remove them from the store. Additionally, it increases customer traffic in those areas, which may hinder visibility.

Traffic Control: Anticipate increased traffic. Make sure your store layout is adjusted if needed. This will need to be balanced with concerns such as increased foot traffic around entrances and exits, and areas with merchandise on sale or that are anticipated to be in high demand during your holiday season.

Replenishment: Devise a plan not just for restocking sold-out merchandise but for product protection. Ensure you have enough products to deploy alongside an equal number of appropriate protection solutions.

As our interviews delved into the concerns surrounding product protection during the holidays, retailers also expressed consternation about the increased risk of fraud. While the focus on product protection revolved around merchandise location, changing protection needs, shopper friction, and organized retail crime, fraud concerns during the holidays encompassed high-transaction volumes, gift cards, vulnerable channels, social engineering, fraudulent activities, and scams. The holiday season’s factors that make stores susceptible to theft also create an environment ripe for fraudulent exploits. It is crucial for retailers to address product protection and fraud concerns to ensure a secure and successful holiday shopping season.

Fraud Concerns During the Holidays

Our interviews revealed several concerns related to fraud during the holiday season. Some of the LP interviewees’ top concerns included high‑transaction volumes, gift cards, vulnerable channels, social engineering, fraudulent activities and scams, and organized retail crime and fraud.

1. High transaction volumes. During the holidays, higher-transaction volumes pose significant concerns for our retailer LP interviewees. The increase in customer traffic and sales can overwhelm existing systems, resources, and team members, leading to operational inefficiencies and fraudulent activities. Furthermore, the surge in transactions increases the likelihood of fraudulent activities, as fraudsters take advantage of the chaos and attempt to slip through unnoticed.
2. Gift cards. Gift cards are a sought-after option among shoppers during the holiday season, making them a prime target for exploitation. One prevalent scam during the holidays involves cloning gift cards by replacing the original universal product code (UPC) with another, enabling the funds to be transferred to a different card undetected. This form of fraud poses a significant challenge, particularly during the hectic holiday rush when transaction volumes are high. Additionally, the popularity of gift cards increases the risk of theft, other forms of tampering, and digital hacking.
3. Vulnerable channels. Offering multiple transaction and delivery channels gives customers the opportunity to purchase and receive products at their convenience. Thus, during the holidays, many retailers will offer services like Buy Online and Pickup in Store (BOPIS), curbside delivery, and ship-from-store services. The reliance on these services increases the risk of fraud, such as fraudulent pickup or delivery claims.
4. Social engineering. The holiday rush creates an ideal environment for social engineering attacks. In this busy environment, fraudsters can blend in and exploit unsuspecting employees and customers. The overwhelming workload during this time can make employees more susceptible to manipulation, thereby increasing the risk of falling victim to social engineering tactics. Additionally, the expanding reliance on digital platforms for holiday shopping introduces new avenues for social engineering schemes. Social engineering attackers may employ tactics such as phishing emails or fake customer service support calls to gather personally identifiable information (PII) or financial data.
5. Fraudulent activities and scams around the holidays are a considerable concern for our retailer asset protection interviewees, particularly cash-related scams. The influx of customers and increased transaction volumes create an ideal environment for scammers to exploit unsuspecting retailers. Cash-related scams can involve counterfeit currency, fraudulent refunds, or manipulation of point of sale (POS) systems.
6. ORC and fraud. Our retail asset protection interviews revealed a significant concern with ORC driven by fraud-based agendas. These criminal groups exploit the busy shopping period, taking advantage of increased customer traffic and overwhelming employees. Fraud‑related ORC activities include schemes like gift card fraud, return fraud, and e-commerce scams.

Overcoming Holiday Fraud Concerns

Considering numerous concerns surrounding fraud during the holidays, our retail LP interviewees shared how their organizations will address these concerns.

• Managing higher-transaction volumes. The rapid pace of holiday shopping poses the challenge of processing transactions accurately and efficiently. A capable team, equipped with an attention to detail and a comprehensive understanding of POS procedures, plays a vital role in managing the flurry of holiday transactions. Meticulous planning involves forecasting customer demands, analyzing historical data, and utilizing advanced analytics tools to predict transaction volumes. By developing robust action plans, including adequate staffing, optimized workflows, and contingency measures, retailers can minimize disruptions during the holiday rush. Effective assignment of responsibilities, such as categorizing transactions and implementing tracking systems, maximizes efficiency and minimizes errors. A skilled team and effective assignment of responsibilities are keys to managing high-transaction volumes during the holidays.
• Protecting gift cards. Our retail LP interviewees expressed many ways to protect gift cards during the holidays. One interviewee’s approach is to implement a comprehensive tampering check. Before selling gift cards to customers, all cards are carefully examined for signs of tampering, such as scratches or tears. This ensures only intact and secure cards are provided to shoppers. Additionally, at the same retailer, a quick review by employees is conducted during the restocking process to verify newly acquired cards show no indications of tampering. Other retailers have taken steps to limit the potential risks associated with gift card transactions. They have established restrictions on the amount and quantity of gift cards that can be purchased in a single transaction. This helps prevent fraudulent activities that involve the mass acquisition of gift cards. Moreover, for those utilizing self-checkout options, trigger alerts or POS shutdowns are utilized. These mechanisms detect and halt suspicious or potentially fraudulent transactions, providing an added layer of security for customers.
• Safeguarding vulnerable channels. Retail LP interviewees expressed the importance of controlling and auditing BOPIS, curbside delivery, and ship-from-store services to minimize loss. Daily audit checks ensure no products are misplaced or left unattended. Other solutions used by interviewees are clear procedures, comprehensive employee training, technology such as inventory management systems and surveillance cameras, and fostering cross-enterprise collaboration to strengthen their LP efforts.
• Combating social engineering. To tackle social engineering scams, regular communication is key. Retail asset protection interviewees stressed periodic updates, particularly during holiday periods. Additionally, some interviewees have implemented comprehensive training programs that educate employees about social engineering techniques and how to identify and respond to potential threats.
• Tackling fraudulent activities and scams. During the holidays, cash-related scams pose a significant concern for our retail asset protection interviewees. To address these issues, some of the interviewees have implemented comprehensive policies and procedures that tackle violations from a holistic perspective. Interviewees also stressed educating employees on common holiday fraud and scams.
• Hindering ORC and fraud. Several of the retail asset protection interviewees stressed the importance of ORC education programs. Others mentioned the establishment of a culture of vigilance among employees.

Final Advice for Preparing for the Holidays

To conclude the interviews on holiday fraud, we asked if they had any suggestions for other LP teams as they gear up for the holidays. Here is their advice.

• Field visits. Establish a strong store presence through regular visits to high-risk locations, engage with store teams, and collaborate with merchant teams.
• Comprehensive training and communication. Implement a multifaceted training approach, including reading materials, videos, a learning management system, and in-person sessions, to accommodate different learning preferences. Make training engaging, explain procedures, set measurable goals, and conclude on a positive note to reinforce the importance of covered topics.
• Constant vigilance and adaptation. Avoid outsourcing critical functions, provide comprehensive training to seasonal employees, establish a culture of vigilance, and encourage prompt reporting for a secure environment.
• Cross-enterprise engagement. Engage cross-functional teams early, plan accordingly during holiday freezes, leverage data analysis capabilities for reporting and insights, and align data needs with organizational priorities for successful fraud prevention.
• The power of checklists. Use a checklist of key tasks and behaviors to ensure consistent implementation of critical actions and reinforce desired behaviors throughout the holidays.

Closing Thoughts

The holiday season presents unique challenges for retail LP, particularly in terms of product protection and fraud prevention. The interviews conducted with experienced LP leaders from various retail sectors shed light on the concerns and strategies surrounding these issues. Retailers face the need to balance increased sales and customer traffic with the protection of merchandise and the prevention of fraudulent activities. Moving merchandise to more vulnerable locations, adapting product protection measures for new merchandise, and managing the delicate balance between customer service and stringent protection are some of the key concerns highlighted.

Overall, these interviews reveal that while retailers face many serious challenges, there are just as many strategies and solutions to combat these challenges. Planning and preparation are key to executing all these solutions and strategies.

Chasey Atkinson is a research scientist with the LPRC. She graduated from Western Carolina University where she obtained a BS in Criminal Justice and a BS in Psychology. During her time at Western Carolina University, she was a Research Assistant for the Criminal Justice Department where she aided in the completion and presentation of various research projects such as “Does Legal Counsel at a First Appearance Court Session Really Matter?” and “Deflection and Pretrial Reform in a Rural Jurisdiction”. Following her graduation from Western Carolina University, she earned an MS in Criminal Justice with concentrations in Crime Analysis and Analysis of Criminal Behavior from the University of Cincinnati. Prior to joining the LPRC, she worked as an Assistant Asset Protection District Manager in retail asset protection.

Justin J. Smith is a research scientist with the LPRC. He received his Ph.D. in Criminal Justice from the University of Central Florida in Orlando. Prior to receiving his doctorate, Justin received bachelor’s and master’s degrees in criminal justice, from Florida Atlantic University in Boca Raton. He is also a graduate of Alexander W. Dreyfoos Jr. School of the Arts where he majored in theater. Justin has authored several peer-reviewed publications. He has presented at national conferences, such as the American Society of Criminology and the Academy of Criminal Justice Sciences, and regional conferences such as the Southern Criminal Justice Association. He has taught undergraduate courses such as Research Methods in Criminal Justice and Famous Crimes and Trials.