The New Math of Theft Deterrent ID Labels

As labeling technology and ORC have changed, so has ROI calculations

Identification is at the heart of security. For cybersecurity, for example, you must distinguish between legitimate and nefarious network traffic. For access control, you must know who’s who in order to deny or permit entry. It’s the same for loss prevention. To effectively mitigate theft, you need to know—and show—that you had a product stolen.

The importance of identification is exactly why product labeling has been mainstay of asset protection strategy for years. So why doesn’t everyone do it? “Senior leadership doesn’t typically fully understand the return on investment and value that labeling provides,” says Denny Dansak, a Senior Consultant at the Stores Consulting Group specializing in external loss solutions and organized retail crime (ORC) prevention. “They often don’t get past the pennies that labels cost. They need to be educated.”

Dansak, a retired Supervisory Special Agent who previously headed Kroger’s ORC division for all its companies, said the identification piece was a top priority for him. “One of the first things I asked was, “how do we identify our products from the same razor blades, laundry detergent, and infant formula that other retailers sell?’” said Dansak. “We had never addressed that, but I knew we needed the ability to identify products as ours, and in the first 30 days we started our search for a solution.”

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It paid off. Dansak says that product labeling, as a foundational element in a comprehensive strategy that includes monitoring of high-theft products and robust investigations, “provided a return that easily outweighed the cost of labeling.”

Recovery is the most obvious way that product identification yields value. If a retailer can show that they own products seized by law enforcement in an ORC investigation, they can, under stringent circumstances, recover it and potentially make it available again for sale. Without it, retailers are victimized again, suggested Jim Cosseboom, Senior Manager, Investigations and Corporate Asset Protection at Ahold Delhaize USA. “Nothing is more frustrating than having a significant recovery and to have a large portion of it be unidentifiable and not returned to any retailer,” Cosseboom noted. He says that recently he’s seen big busts in which less than half of stolen products were accounted for, “so it basically just sits there in police evidence.” Even if products are consumable or otherwise unable to go back on store shelves, the ability to identify ownership of stolen products is vital to mitigating loss. “It allows retailers to ask for restitution from the prosecutor’s office and to recoup their losses,” said Lieutenant Jim Ostojic in the Polk County (Florida) Sheriff’s Office.

Accelerating ROI today is a marked improvement in labeling technology, according to Dansak. “Avery Dennison was the only manufacturer that could make a laminate and adhesive with my specifications, with essentially the same adhesive properties as police evidence tape, so that you can’t take it off without significantly damaging the product. If product is damaged, fences find it difficult to resell that product.”

“Avery Dennison was the only manufacturer that could make a laminate and adhesive with my specifications, with essentially the same adhesive properties as police evidence tape.” – Denny Dansak, retired Supervisory Special Agent

The quality of a label’s adhesive has a direct correlation with ROI by enhancing its deterrence value, according to Cosseboom. It prevents casual removal of stickers and significantly increases time and labor costs for fencing operations. And, since they operate just like any business, even ORC operations with sophisticated cleaning stations avoid products with tough-to-remove stickers, such as Avery Dennison Theft Deterrent and Recovery labels, which feature numerous types of face sheets and difficult to remove adhesives to work on different kinds of product material. “A sticker immediately reduces the product’s desirability to thieves,” said Cosseboom. “In interviews with boosters, they’ve told us that fences won’t buy [labeled products] or they buy them at a discount because it increases their risk and because of the trouble of trying to remove it and because they degrade the product so they have to sell them for less.”

Dansak learned a similar lesson during his time leading Kroger’s ORC effort. “From our investigations and experience, and in working with law enforcement, we knew that labels deter crime because of what fences tell boosters. These labels are extremely difficult to remove without damaging the stolen product. It’s true in all fencing operations, be it a mom-and-pop or a multi-state operation.”

And, just as product identification is yielding greater value today for retailers that utilize the strategy, it also holds great potential to benefit the retail industry more generally. If a greater number of retailers were to commit to using high-quality security tags and product identification labels, “it would absolutely make a difference in the ability of the industry to disrupt organized retail theft,” believes Ostojic.

As an example, Ostojic says product identification labels change the entire nature of how an ORC case gets handled. “In a lot of cases it’s imperative to have that identification, because when you don’t have it, it’s extremely hard to determine the origin of the product.” Knowing that, sophisticated thieves will sometimes mix stolen products with those purchased legitimately on the secondary market and warehouse them together to legitimize the stolen goods. Police will still try to go after thieves in these cases, said Ostojic, but the case is harder to make.

Any lack of clarity in an investigation is a direct benefit to thieves: it lowers case values, reduces sentences, and can cause prosecutors’ interest in pursuing a case to wane. “It definitely lowers the bar for prosecution when you’re able to identify the specific retailer who had product stolen, rather than some nameless, unknown victim,” noted Cosseboom.

Product identification directly impacts prosecution and case disposition—and it also can determine whether a case ever gets off the ground. Ostojic noted that product identification can jumpstart an investigation and provides law enforcement with vital intelligence they need to identify suspects, track fences, and disrupt theft rings. “For example, if we come across a stolen product and we not only know who it belongs to but if it came from ‘Store 295,’ we can go to that store and run through its surveillance footage to identify who took the product.”

Finally, given the significant disruption that labels can cause to ORC operations, they’re incredibly cheap. Labor costs are minimal when retailers target their use on high-theft items, or if stores are already affixing labels for other reasons, such as for price or promotions, and it’s certainly less expensive than many popular LP tools with less clear ROI. “Compared to a lot of different deterrent prevention strategies, stickers have been a cost-effective tool,” said Cosseboom. “It’s not an end-all, be-all, but it is an effective tool to reduce the likelihood of theft.”

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