An investigation is a searching inquiry used to determine facts by gathering accurate and reliable information. In the retail setting, that information is most often developed through thorough research of internal documentation, the power of observation, or confidential tips that may indicate potential employee theft or fraud and/or violation of company policy that creates shortage or profit loss to the company.
As a retail investigator, your goal is to unravel the mysteries of loss, merchandise and/or cash theft, and fraud in stores. To master deductive reasoning and investigation, you need to develop key skills like meticulous observation, scenario visualization, critical thinking, and calculated intuition. Let’s delve into some techniques inspired by history’s greatest investigator—Sherlock Holmes.
Observe Every Detail
Strong investigators have acute observational skills. They notice minute details that others often overlook. As an investigator, train yourself to thoroughly scrutinize your store. Observe all aspects meticulously including store layouts (front and back of house), merchandise displays, staff activities, and customer interactions. Look for any peculiar patterns, behaviors, or anomalies that seem unusual. Subtle oddities like loitering customers, unprofessional employees, poor store standards, and a lack of supervision could provide vital clues and warrant examination. In investigations, every detail matters.
Eliminate the Impossible
Top investigators eliminate implausible theories that don’t fit the facts. As an investigator, you must avoid jumping to conclusions without evidence. If products frequently disappear, methodically consider all possibilities before targeting suspects. Could they be stolen by customers or employees? Could it be a case of organized retail crime (ORC)? By ruling out less likely scenarios, you can focus your investigation on the most probable causes. In other words, to identify why a shortage is occurring, first identify where it is NOT occurring.
Visualize Scenarios
Great investigators mentally visualize crime scenes and events. Similarly, visualize your workplace—picture the store, employees, selling floor, and back of house operations in your mind. Consider what vulnerabilities exist, who has access to what areas/products, and who exhibits suspicious behaviors. What do previous audit results and physical standards reveal? These mental reconstructions can reveal security gaps, scenarios, and suspects worth investigating.
Utilize Investigative Resources
The best investigators fully utilize all available technologies and resources. Similarly, leverage every possible resource at your disposal including security footage, transaction logs, staff interviews, and surveillance systems. Analyze this data to identify subtle patterns, trends, and inconsistencies that could provide breakthroughs and unravel mysteries.
Keep an Open Mind
Consider all the facts, not just those that fit neatly into your investigative process. Sometimes the facts take us in directions we didn’t expect, providing an entirely different outcome than we anticipated. This also helps avoid drawing false or misguided conclusions that can hinder or obstruct your investigation.
Apply Deductive Reasoning
Top investigators combine evidence, logic, knowledge, and intuition to reach conclusions through deductive reasoning. As an investigator, strive to master deduction. Gather all available facts, analyze them based on your expertise, and follow your instincts. By blending deductive analysis with intuition, you can solve mysteries of loss and internal theft.
Develop an Organized Investigative Mindset
An organized investigative mindset allows you to clearly define the scope of your investigation, understand its root cause, and identify potential solutions. It helps you avoid confusion and keeps your thoughts focused on the issue at hand. With an organized investigative approach, you can systematically address different aspects of the investigation and allow yourself to tackle complex issues by breaking them down into manageable parts.
One way to do this is to break down a retail loss investigation into three (3) parts:
1) People
Let’s take a chapter from the successful retail investigators of the past when there were no cameras, no exception reporting, or other tools of technology that support our investigations today. Retail investigators from this era often relied on their working relationship with store management and employees to generate information to support their investigation. Maintaining the confidentiality of your investigation is critically important during this phase.
Understanding management feedback about staff behavior changes like work ethic, attendance, and productivity will yield clues. Cultivate information—store staff are the eyes and ears of the store. Engaging people in general discussion combined with observation may gain pertinent information that will lead to suspects and vulnerabilities that create loss. Make a mental list of suspects from all people-related suspects that you can utilize later in your investigation.
2) Technology
Most stores have technical resources designed to help identify suspicious activity. However, regardless of quantity or quality of those resources, the success of this technology rests in the ability of the investigator to exploit its potential. Common tools include video review of opening and closing procedures, and front-end POS exception reporting—especially if combined with video, shortage and chargeback data, cash loss tracking, and so forth. Make a mental list from all technology-related suspects that you can utilize later in your investigation.
3) Common Sense
You must be creative in your investigative thought process. Retail investigators that become overly reliant on people and technology to guide their investigations often overlook basic investigative common sense.
- How would I do it? Think like a dishonest employee. For example: “If I were working as a part-time salesperson on a Saturday evening, how would I steal from the store?” Most likely, anything you can think of on your own has the potential to be occurring in the store; and yet too often we depend on people and/or technology to tell us what we should already know.
- Supervision. Identify when there is a lack of supervision. Employees are more likely to be dishonest when management is not present.
- Reality Check. Visit a problematic store or view remote video of a Saturday evening to see how a store really operates. Working in retail, we all know that the way the store operates Monday-Friday from 10 a.m. to 6 p.m. can be much different than the way it operates nights and weekends. What looks suspicious in regards to the store operation and vulnerabilities including staff and customer behaviors all tell a story.
Make a mental list of your observations from common sense, combined with people and technology, and you should have a comprehensive working list of suspects and/or scenarios to be investigated in more detail.
Know Your Suspect
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.” —Sun Tzu, The Art of War
“Know your enemy” is indeed very applicable and important in the realm of criminal investigations. Knowing your enemy—in this case the suspect—involves understanding their motivations, behaviors, and patterns. This knowledge can provide invaluable insights into why a suspect committed the theft or fraud. Here’s why this is important: I have seen so many instances of investigations conducted where an investigator did all of their necessary research to prove the theft or fraud, but has little insight into the actual suspect themselves.
Be sure to check all available facts by verifying your suspect through various open-source intelligence (OSINT) tools is critical to the evidence gathering process by understanding motive, connections to other employees or customers, as well as personal and store safety. Understanding your suspect’s tendencies can help investigators approach situations with the necessary caution.
Become a Master Investigative Mind
By honing your observation, intuition, critical thinking, and deductive reasoning, you can master retail investigations. Stay vigilant in noticing details, visualizing scenarios, eliminating unlikely possibilities, and uncovering the truth through deduction. With keen observation, logic, resources and resourcefulness, as well as deductive reasoning, you can master retail investigations.
John Matas is a retail industry consultant with expertise in loss mitigation strategies, financial crimes, cybersecurity protocols, and regulatory compliance. Most recently, John served as the global head of risk and fraud for Etsy where he was responsible for the organization’s fraud strategy and framework. Previously, John was the vice president of investigations, fraud, and ORC for Macy’s for over 25 years. John is on the Editorial Board for LPM.