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Technology and training arehelping to combat sweethearting and

other forms of retail theft.BY KIM ANN ZIMMERMANN

OMETIMES WHAT YOU DON'T KNOW CAN HURTyou-a Jot-and that is especially true of theft in grocerystores. Employee and customer theft, which can often goundetected until serious losses occur, can be a huge drag ona supermarket's bottom line.

Over the past several years, grocers have been spendingmore on technology, training and personnel to combat thisproblem, and those investments appear to be paying off.Shrink declined for the third straight year, to a median of1.52% of sales, according to the Food Marketing Institute's(FMI) Supennarket Security and Loss Prevention 2007 report,which was released late last year. The 2006 shrink figure is

down from 1.69% of sales in 2005 and 2% in 2004.With prices getting higher and household budgets getting tighter, gro­

cers are going to have to pull out all of the stops to combat crime, expertssay. That is particularly tough as organized retail crime gangs are on the

rise, according to the FMI report.Nearly six in 10 of the food retailers surveyed (59.6%) reported an

increase in these crimes in 2006, about the same number in last year'sreport (62.5%). The FBI estimates that these gangs steal up to $30 bil­lion in products a year from all retailers.

HIGH-TECH HELPOne of the biggest problems with combating retail theft is that therearen't enough eyes to spot evelY incident. It is impossible to watch everymove of every cashier or customer, so some grocers are putting high­tech surveillance systems to work to help automate the process of iden­tilYing theft incidents and calling up the corresponding video.

"As we know from the FMI study, 32% to 38% percent of shrinkhappens at front end," says Tim Bartkowiak, director of loss preven­tion for Spartan Stores, Inc. in Grand Rapids, Mich. "We knew therewere issues and we needed to do something."

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Spartan has been using a sys­tem from ADT Security Services,Inc. in Boca Raton, Fla. for near­ly two years. There are cameras atthe checkout, which are linkedwith the point-of-sale and otherreporting systems. Each store hasa list of key performance indica­tors, and the system reportsexceptions such as an unusualamount of refunds.

"We just click on the time por­tion of the exception report, andit takes us directly to the video,"says Alicia Despres, loss prevention analyst atSpartan. This makes it easier for investigators,she notes, because they don't have to spendtime matching up the questionable transac­tion with the corresponding spot on the video.

. The grocer is now investigating bringing thesystem to other areas such as pharmacy andrecelvmg.

Advances in the technology have enabledvideo cameras to be integrated into a supem1ar­ket's computer network, rather than having thecameras operate independently, says LeePernice, ADT's director of vertical markets."[Cameras] are no longer independent boxeshanging off the network," she says. "They arefully integrated and they can work with any serv­er. As the IT department gets more involved inthe security end of technology, they are fairlyprotective of what they want to put on their net­works, and rightly so. Today's cameras can workwith many of the standard technology appli­ances being used in the grocery industry."

While the point-of-sale exception reportingsystems and video are not new technologies,retailers and technology providers are lookingfor more ways to merge systems to fight theft ina more automated fashion.

"POS exception reporting and video analyt­ics are existing technologies that we've had foryears, but for the most part they weren't beingutilized," says John Throckmorton, director ofoperations for Digital Site Management,L.L.C. in Waynesburg, Pa.

The company makes LaneVision, a cameraenclosure that fits directly into the check standlight at the register. As Throckmorton explains,the angle provides a clear, unobstructed viewof the cashier, cash drawer, customer and bag-

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ger. The camera is concealed by a tinted view­ing window, making it unnoticeable toemployees and customers. Video digitalrecording of transactions and front-end activityis being caphlred from only a few feet away,providing clear images.

A major problem with detecting employee"sweethearting"-not ringing up an item for afriend or keying in a much lower price, forinstance-is that sophisticated operators knowhow to operate under the radar. They amountsand size ofthe transaction that might trigger anexception.

Employing technology that is similar to facerecognition systems, StopLift Checkout VisionSystems in Bedford, Mass. has developed a sys­tem that can automatically identify some ofthe gestures typically associated with sweet­hearting. For example, the system can detectwhen a cashier has slid an item beyond reachof the scanner in an attempt to make it appearto the casual observer as ifhe or she is scanningthe item. Or, they might put their hand overthe bar code of the item. Another trick involvesstacking two or three items together and sim­ply scanning the item at the bottom.

"Exception reporting is great, but it is onlyhelpful when people get greedy;' says Malay

Kundu, StopLift's CEO. "Ifsomeone has a drughabit to feed or they are down on their luck andtake a lot ofmoney at once, that is going to showup in data mining. But those who have beendoing it for a long time know that the way tokeep doing it is not to get too greedy, and theyare almost impossible to find."

Kundu also notes that exception reportingfrom the point-of-sale system won't identifyitems that were not scanned.

The StopLift system analyzes interactionsbetween humans and objects, Kundu explains."The system looks at how the cashier handleseach and every item. It does what a humancould do if they had the stamina."

Hannaford Supermarkets and Big Yareamong the supermarkets testing the StopLift sys­tem. "Having the Stoplift technology in placehas enabled us to discover losses that we werepreviously unaware of," notes Tom Perkins,director of loss prevention at Hannaford inScarborough, Maine, "This is one of the mostsignificant leaps in loss prevention technologyI've seen in more than a decade. Despite sever­al new kinds ofloss prevention technology avail­able to us, none of them has addressed sweet­hearting, which is costing the retail industrynearly $13 billion a year."

Photos, dockwise from top left, courtesy ofADT Security Services, Inc, NuTech National, StopLift, and Carttronics, LLe

e c

"We are excited to be able to control moreof our shrink and loss through the use of thisemerging technology," according to MarkGaudette, director of loss prevention at Big Y,Springfield, Mass. "In addition, StopLift willenable us to improve our cashier work forceoverall through better training as well as bettersvstems to detect and control employee theft."

Another theft issue being addressed by tech­nology is refund processing without a cus­tomer being present.

"Historically, this has been a big problembecause there has been no one to monitorwhether there was actually a customer at theregister when the cashier or customer servicestaff was processing a refund, and those whowanted commit crimes know this is a vulnerablearea," says Warren Brown, director of marketingfor IntelliVid Corp. in Cambridge, Mass.

IntelliVid's recently patented CAT technol­ogy uses video analytics to track the move­ments of everyone captured on camera in thestore, including customers and employees. Inthe case of a cashier processing a fraudulentreturn, the system would identify that a cus­tomer was not at the register. This can also beused to alert store security to a customer whohas put an item in a coat pocket, for example,because the system analyzes the customer'smovements and recognizes them as out of thenorm. This can also be used to identify fraud­ulent slip-and-fall reports, he says.

Video analysis can also help to catch itemsat the bottom of the basket, according to JumbiEdulbehram, director of strategic channels forAxis Communications Inc. in Chelmsford,Mass. "We have a couple of grocers experi­menting with video to look at the bottom of thebasket to see if there are items there that havenot been rung up," he says.

Thieves want to get in and out of the storequickly and anything that can slow them downis potentially money saved. Carlsbad, Calif.­based Carttronics, L.L.C., which has a systemfor preventing shopping carts from leaving theparking lot, is bringing its technology inside thestore to prevent "push-out" thieves who simplyroll their carts out of the store without paying.

The system employs radio frequency tech­nology that recognizes the cart when it enterstl1e store. Once the cart enters the store, it hasto go through the checkout line before exiting,

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or the wheels will lock at the exit."Vvnen confronted with the locked cart, the

person will either flee the scene, or go back tothe register to pay for the goods," says John R.French, Carttronics' founder and CEO. "Thiswill not inconvenience good customers." Hesays the system is in tests at six retailers, includ­ing national and regional chains.

MORE MOBILESince retail crime can happen anywhereinside tl1e store as well as on tl1e exterior, videocamera technology has had to adapt by becom­ing more mobile and even weather resistant.

One unusual target for theft is copper pip­ing on the exterior of supermarkets to accom­modate refrigeration and cooling equipment."We know of a single store that lost $50,000replacing and repairing units when the cop­per was stolen," says Greg DeTardo, presi­dent NuTech National, a security servicesfirm in Maitland, Fla. "It is really easy andquick for thieves to steal the copper with afew cuts. This results in repairs, not to men­tion the spoiled food and items as a result ofthe refrigeration systems going down."

In response, NuTech has developed a wire­less cameras that can be used outdoors andtrained on targeted items such as equipment,he says. "The wireless outdoor camera can betriggered by motion, which would send analert to a central monitoring station."

Technology is also playing a role in the cashhandling process, another area that can be vul­nerable to tl1eft. Brink's, Inc., Coppell, Texas.,offers the offers tl1e CompuSafe service forretailers to streamline the cash handlingprocess. Store employees insert currencydirectly into a safe, which reads and digitallyverifies the denominations of the bills andplaces tl1em into sealed, locked, secure cas­settes. An armored messenger collects thesealed cash containers at tl1e store for deposit.

For retailers, Brink's also offers iDeposit, aWeb-based deposit creation and tracking sys­tem. Deposit tickets are generated online. Thedeposit slip, cash and checks are put into atamper-evident bag for pickup.

"The object is to get the cash into a safe asquickly as possible and have as little access tothat money as possible," says Fred Purches,Brink's senior vice president. 0