Reports indicate that security in the United States has worsened in many arenas since September 11, 2001. Many crime-fighting resources are being focused specifically on terrorist activities at the expense of other offenses, including those that affect retailers such as organized retail crime.
In addition, once the perception of an immediate threat evaporates, it is human nature to want to return to “business as usual,” which often means that some retailers ignore the risks or simply pay lip service to the implementation of security measures.
It’s always simpler to sit back and do nothing than to take an action, but some retail entities can be lulled into complacency by the nature of their businesses. Retail opticals are a prime example of companies that experience more than three times their share of shrinkage, yet take almost no actions to prevent the losses.
Competent, professional LP execs who work for chain opticals often find their hands tied when it comes to shrinkage control.
Reliance on Old Technology
One of the unique difficulties that opticals have is that their employees don’t want to think of themselves as retailers—instead, they are “doctors,” “opticians,” “health care providers,” or “optical professionals.”
Another stumbling block is that the optical industry has typically been years behind other business sectors in terms of sophistication and technology. This lag can be illustrated by the content of optometric trade magazines just prior to the millennium. The topic of discussion in computerization articles was not “What kind of computer should you get?” but “Should you get a computer?”
The lack of business savvy among optical professionals—ophthalmologists, optometrists, and opticians, known as the “Three Os”—can be easily understood given their background and training. Ophthalmologists are medical doctors who specialize in surgery and the treatment of diseases and disorders of the eye. Their medical school training emphasizes the medical aspects, not the business topics, related to their careers. Now that health insurance has become a nightmare in this country and doctors are seeing reimbursements shrink, many ophthalmologists are focusing on expanding their revenues by providing other services. LASIK, or laser vision correction, plastic surgery, and the dispensing of prescription eyewear and contact lenses supplement these doctors’ incomes.
As relative newcomers to the business of retail optical, dispensing ophthalmologists experience a great deal of shrinkage. Unfortunately, their image of themselves as doctors, rather than retailers, precludes their making their difficulties public or seeking the appropriate remedies. Instead, incidences of loss are whispered about at medical conventions and on golf courses, rather than spotlighted in public, so they continue to be victimized in greater numbers because they fail to put deterrents into place.
Optometrists, on the other hand, have been dispensing eyewear and contact lenses on a large scale for over twenty-five years. They have a slightly better sense of their businesses as retail concerns. However, their training in business matters is also limited. After four years of college, an optometrist attends a four-year optometry school, where business matters are skimmed only lightly. Add to that the collective feeling of not being respected as a “real” doctor (similar to that experienced by dentists, podiatrists, and chiropractors), and optometrists are much too busy fighting to get and maintain the rights to prescribe medications for certain eye conditions to pay attention to accepted business practices.
Optical goods have long been favorites of organized retail crime. A branch of the Russian Mafia working out of New York City has been going on “field trips” to various towns and serially shoplifting from the local opticals for years.
Opticians have a completely different set of circumstances with the same resulting problems. In many states, an optician, the person who fabricates eyewear, fits eyeglasses and contact lenses, and dispenses both, is not required to have any type of license or certification. In those states that do require opticians to be licensed, the educational requirement is for a two-year college degree or an apprenticeship combined with other training in lieu of college credit. Although opticians have been retailing eyewear for hundreds of years, most are neither business-savvy nor sophisticated.
The lack of sophistication and comfort with technology is reflected in the day-to-day equipment used in the optical industry. The method of refraction, or determining a patient’s eyeglass prescription (when the doctor asks, “Which is better, number one or number two?”) is the same as when Benjamin Franklin had his eyes checked.
Likewise, the equipment that is used behind the scenes to grind the prescription into the lenses and to fabricate eyeglasses still operates on the same principles as when it was invented. Sure, a small amount of computerization has been introduced, but the machinery is all adapted from other industries and made to be so simple that a monkey could operate it. In short, there are not a lot of technological marvels coming out of or going into use in this industry.
Chain Store Issues
A catch-22 for optical chain stores is that they inadvertently contribute to the growth of their retail shrink rates by trying to implement good business practices.
A full-service optical store provides eye examinations, contact lens fittings, prescription eyewear, and Rx and nonprescription sunglasses, as well as contact lens solutions and other accessories. One of the biggest costs to a retail optical is payroll. In states with licensing requirements for opticians, a prescribed ratio of licensed opticians to non-licensed floor personnel must be on the premises. The more highly trained the employees are, the higher the wages they command.
Chain stores naturally have an interest in keeping their payroll costs down, which are high because of the health-care aspects of the services they provide. They do so by fighting against licensing requirements for opticians and by selecting employees whom they can pay the lowest wages in return for the highest sales. Sometimes, that means that the doctors and opticians who are hired may be good sales people, but theydo not have a good head for the overall business. Other times, they may be fresh out of school and thus inexperienced. What sometimes results is that staff that will work for lower wages or have a lack of ambition to be business owners find themselves employed by chain stores because they prefer the security that comes from working for large corporations. A lack of business-smart employees means that chain stores have few people they can count on to help protect their interests by fighting in-store shrink.
This attitude seeps into the corporate management layers as well. Many optical chains do not employ loss prevention executives at all. Of those that do, these LP specialists do not concern themselves with shrinkage, in part because there are too few of them to be able to combat it effectively.
Competent, professional LP execs who work for chain opticals often find their hands tied when it comes to shrinkage control. Corporate decision makers for a prominent retail sunglass chain, for example, recently decided to implement “open” displays in several stores to encourage purchases. After a short trial period…and without conclusive evidence demonstrating the effectiveness of the new system…the same people decided to expand the program. Non-prescription sunglasses have a huge shrinkage rate even when they are secured in some way—and this company does not even EAS-tag the sunglasses.
A confidential source in the executive LP department who thinks that the open displays are not a good idea commented wryly, “Well, at least the LP employees know that our jobs are secure.”
Are Opticals to Blame for Losses?
Independent opticals and small local or regional chains are owned by optometrists or opticians, who lack basic retail security knowledge. They, like their corporate counterparts, fail to put security measures into place, not out of a lack of concern, but because of ignorance. On the whole, optical personnel are not in tune with the business realities of today. When it comes to security, they don’t even know where to begin asking the right questions, and they are paying the price for it.
The National Retail Security Survey has traditionally provided a snapshot of losses incurred by retail entities, broken down into categories. It is telling that up until a few years ago, only a few opticals contributed their shrinkage figures to the survey. The most recent report, however, includes information from absolutely no optical entities. Their conspicuous absence begs the question as to why they are no longer providing these statistics.
A couple of possibilities come to mind. One is that optical chains are no longer keeping statistics on their losses. Although this scenario is possible, it seems more likely that with overwhelming losses and a lack of plans in place to combat them, the opticals do not want to reveal their devastation at the hands of criminals.
Through other sources, it has become apparent that organized retail crime activity in the retail optical arena is blossoming and wreaking havoc on these businesses. The Federation of Ophthalmic and Dispensing Opticians (FODO), a United Kingdom-based trade association, acknowledges the problem and provides a free handbook for recognizing and combating theft issues. The FODO also conducted a survey of optical practices to assess the scale of the problem, the measures being taken to combat crime, and the additional measures that could be taken. (Not surprisingly, no U.S.-based optical trade group has made the same effort, but then the U.K. has always been years ahead of the U.S. in terms of crime prevention issues.)
According to the FODO, opticals have no one but themselves to blame for their severe losses. “The main point for us to take to heart is that we are responsible for creating most of these conditions [that] make us an easier target for organized retail crime,” the FODO says in its handbook.
“Opticians are considered to be softer targets for organized retail crime because we have failed to keep up with the deterrent measures taken by others. At the same time, the nature and value of opticians’ goods has significantly changed over the last decade – as have consumer perceptions of eyewear.
“Designer frames and [sunglasses] are now stocked in greater volumes than before to satisfy increased public demand for branded ‘fashion’ goods.
“Opticians are now high-profile targets for organized retail crime,” according to the handbook.
Fashion vs. Function
The FODO points out that “as banks…and jewelers have taken measures to combat organized retail crime…criminals have turned their attention to the high ticket and portable items now stocked by” retail opticals. Department stores, big-box stores, and drug stores that carry sunglasses and OTC eyecare products, such as eyedrops and contact lens solutions, are also affected by this trend.
Interestingly, while some manufacturers will source-tag their optical products or tag their eyewear for sale in certain venues, those measures are not carried through for sales to retail opticals. The Foster Grant Group, which makes the well-known non-prescription sunglasses, utilizes an EAS tag for the sunwear sold to stores other than retail opticals. However, the company does not tag its ophthalmic eyeglass frames (frames that are meant to accept prescription lenses), which are sold to opticals – quite possibly because most opticals don’t have the necessary pedestals required for the tags to function as theft deterrents. No other ophthalmic frame manufacturer or importer offers EAS-tagged products to optical retailers, either, and only a handful of optical suppliers even sell EAS tags. Even fewer opticals purchase them.
It can be argued that frame manufacturers are not hurt by the loss of their product at the retail level. On the contrary, an optical that experiences shrinkage will simply have to purchase more product from the manufacturer. Optical professionals, unlike loss prevention executives in department and drug stores, are not savvy enough to band together to demand manufacturer cooperation, and therefore do not get it.
Attention may eventually be focused on the problem by the increased availability of source-tagged optical goods, however. A&H Manufacturing, for example, incorporates Checkpoint System’s FR EAS circuits into integrated, multilayer hang tags for sunglasses, which the company calls “one of the hottest trend categories…. Sunglasses have a history of walking out of the store easily.”
Counterfeiting
One area of organized retail crime that frame manufacturers do address is that of counterfeiting, because a bogus product bearing a specific brand mars that company’s name. However, they are experiencing great difficulties with getting law enforcement to prosecute their cases. This despite the fact that, according to the Department of Homeland Security, sunglasses, along with watches and handbags, were the second most frequently seized commodities in organized retail crime anti-counterfeiting operations last year, just behind media products (software, CDs, and DVDs).
Vance Lommen, the legal and security director for Oakley, Inc., a well-known sunglass manufacturer, attended a conference in April hosted by the National Intellectual Property Rights Coordination Center. Speaking about the counterfeiting of his company’s products, he reportedly said that the company works these organized retail crime cases at the street level and that since September 11th, they have had to build the cases in order for law enforcement to take them. The terrorism focus has drained many of the U.S. Customs resources normally focused on counterfeiting, which falls under the purview of Homeland Security.
Other companies, such as Silhouette, an upscale eyeglass frame manufacturer, are pursuing counterfeiters through injunctions prohibiting companies from offering inferior goods tagged with the Silhouette brand for sale. The company also has shut down numerous eBay auctions through the site’s verified rights owner (VeRO) program and is monitoring unauthorized sales and advertising and is taking action against other infringers advertising counterfeit Silhouette products.
Financing Terrorism with Fashion Eyewear
A burgeoning trend that hasn’t yet come to light in the form of a formal report, but is being recognized at the ground level is that organized retail crime plays a huge part in the funding of terrorist activities. Shoplifting and burglary crews target optical goods, among others, and feed the rings offences that funnel the profits into terrorist organizations.
According to CIS Robert W. Nolen, a lead trainer in a course developed with Bureau of Justice Assistance grant money called “Understanding, Combating, and Surviving Terrorism,” one of the niches exploited by many organized retail crime groups from terrorist “countries of interest” is there sale of stolen consumer goods. The primary method used to acquire the goods is shoplifting by groups of thieves from El Salvador, Honduras, and Mexico, who typically travel together. Distribution of the stolen products throughout the U.S. seems to be handled primarily by Middle Eastern fences. One shoplifter reported that she had “worked” stealing baby formula from Florida to Colorado for over seven years, making $3,000 per week.
Although reports of such organized retail crime rings in the U.S. are released in dribs and drabs, this trend is reflected by published accounts elsewhere. Last year, for example, Winnipeg Police busted a major Canadian organized retail crime ring by targeting the activities of a local group of known property crime “street level” criminals who were involved in burglaries as well as the thefts of specific high-end merchandise. On an almost daily basis, these thieves hit local businesses, including the Shoppers Optical, where they specifically targeted merchandise to steal, including Oakley sunglasses that sold for the equivalent of about $300 USD.
The investigation revealed that on the same day of the thefts, this group would routinely “off-load” their stolen goods to a very specific and select group of high level fences, including some who placed “thefts to order” for worldwide resale, while other fences simply sold their goods to known acquaintances. The authorities confirmed that the group stole approximately $64,000 USD worth of property, and police believe that they are responsible for the thefts of hundreds of thousands of dollars in property over the previous two or three years.
The types of goods that are targeted by organized retail crime are reflected by the concerns of recent attendees at an RF Users Group meeting, who said that their highest priorities are eyecare products, as well as cosmetics, batteries, and baby formula, along with meats and bottled beverages.
Burglaries
In addition to the theft/resale schemes, Middle Eastern fences have been found to be involved in both the planning and execution phases of large scale burglaries of consumer goods. The burglaries take months in the planning and involve such sophisticated techniques as rooftop entry, cut phone lines, and lookouts with cell phones and walkie-talkies on foot and in cars watching for police response. Many of the Middle Eastern fences caught in such activities have previous convictions for narcotics smuggling. It appears that this type of criminal has given up dealing narcotics because property crimes in the U.S. carry lighter prison sentences and are not as high a priority for prosecution as drug-related cases.
Optical goods have long been favorites of organized retail crime. A branch of the Russian Mafia working out of New York City has been going on “field trips” to various towns and serially shoplifting from the local opticals for years. The opticals are often scouted by persons who enter the shop during a busy time and pretend to be a patient or customer looking for high-end frames. Once the optician fetches the expensive product, thus revealing its location in the store, the scout informs confederates, who then return at night to burglarize the store or send in gangs of shoplifters to conduct a “sweep” of the optical’s expensive merchandise.
Unfortunately, opticals are so unprepared for these incidences that one burglary or shoplifting sweep has been enough to put many independent opticals out of business. Chains are better able to absorb the blow, but they, too, provide juicy repeat targets when they fail to implement counter measures.
The U.S. optical industry’s focus on shrinkage is abysmal. The topic receives very little coverage in the trade magazines and almost no education aside from one written continuing education module and one hour of continuing education delivered by the author of this article. Given the historically slow progress within the industry, it is unlikely…and unfortunate…that change will come anytime soon.
This article was first published in 2004 and updated in April 2016.
