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A STUDY ON THE
BEST PRACTICES ADOPTED BY
HOUSE OF FRASER AND PRIMARK ON STOCK LOSS
Company project presented in fulfillment of the requirement for the degree of
MBA in International Business Management (NTU)
Graduate Business School,
Griffith College Dublin
Manjulekshmi.S.
Submitted on May 2010
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Graduate Business School Assignment Cover Sheet
Student name: Manjulekshmi Sasidharan
Student number: 2622639
Course: MBA in International Business Management
Stage/year: 2
Subject:
Study Mode: Full time yes Part-‐time
Lecturer Name: June Meehan
Assignment Title: Company Project
No. of pages: 59
Disk included? Yes No no
(ie. number of pieces submitted, size of assignment, A2, A3 etc)
Additional Information:
Date due: 27 may 2010
Date submitted: 27 may 2010
Plagiarism disclaimer:
I understand that plagiarism is a serious offence and have read and understood the college policy on plagiarism. I also understand that I may receive a mark of zero if I have not identified and properly attributed sources which have been used, referred to, or have in any way influenced the preparation of this assignment, or if I have knowingly allowed others to plagiarise my work in this way. I hereby certify that this assignment is my own work, based on my personal study and/or research, and that I
have acknowledged all material and sources used in its preparation. I also certify that the assignment has not previously been submitted for assessment and that I have not copied in part or whole or otherwise plagiarised the work of anyone else, including other students.
Signed & dated:
Please note: Students MUST retain a hard / soft copy of ALL assignments as well as a receipt issued and signed by a member of Faculty as proof of submission.
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CANDIDATE DECLARATION
CANDIDATE NAME: Manjulekshmi. S.
I certify that the ‘company project on the best practices adopted by House of
Fraser and Primark on stock loss’ is the result of my individual work and that reference is
provided for others work and acknowledged.
CANDIDATE SIGNATURE:
DATE:
SUPERVISOR’S NAME:
SUPERVISOR’S SIGNATURE:
DATE:
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ACKNOWLEDGEMENTS
There were many people who helped me to
accomplish this Endeavour over the period. They provided a lot of help, support, and
motivation. This task might have never been completed if these people not support me. These
people are mentioned below.
First of all, I would like to thank my GOD for helping me achieving my task. It’s because of HIM
that I am what I am right now. I owe a lot to my supervisor June Meehan, because of her
guidance, wisdom, experience, and support I achieved my goal.
I would also like to thank Professor Wallace Ewart, John Byren For their added support and
guidance.
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ACKNOWLEDGEMENT
My special thanks to my parents, for giving me all the support
for the completion of my studies and for achieving my goals in life.
I would like to give special thanks to Vishnu Praveen, for giving
me all the support for successfully finishing my MBA in International Business Management.
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TABLE OF CONTENT
Title Page………………………………………………………………………………….…………………..... 1 Candidate Declaration……………………………………………….…………..………………….……...3 Acknowledgement………………………………………………………………………………….……..4-‐5 Table of Content…………………………………………………………………………….………………6-‐8 Executive Summary……………………………………………………………………………………....9-‐10 CHAPTER 1 INTRODUCTION……………………………………………………………………………………….…………….11 1.1.Background of the study……………………………………………………………………..….…… 12 1.2.Objective…………………………………………………………………………………………...……..….12 1.3.Source of Data……………………………………………………………....………………………….….13 1.4.Purpose of the Study………………………………………….………………………...………..…..…13 1.5. About the Study………………………………………………………………………...………..…..…..13 CHAPTER 2 2. LITERATURE REVIEW……………………………………………………………………………………..….15 2.1. Shrinkage Shrink……………………………………………………………………..…………….…. 16 2.2. Definition………………………………………………………………………………..…………….…. 17 2.3. How Shrinkage is Occuring?................................................................................................17-‐18 2.4.Internal Shrinkage………………………………………………………………………..…………….19 2.5. External Shrinkage……………………………………………………………………….……………19 2.6. Reason For Shrinkage………………………………………………………………………………. 19
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2.6.1. Shoplifting …………………………………………………………………………..……….………..19-‐21 2.6.2. Employee theft …………………………………………………………………….………………….22 2.7. Best Practices for Employee Theft ……………………………………………….…..………….23 2.8. Best practices to reduce Shrinkage…………………………………………………..…..……... 24 2.8.1. Management Policy………………………..…………………………………………………….…....25 2.8.2. CPTED……..……………………………………………………………………………………….……….26 2.8.3. Audits……………………..………………………………………………….…………………………….26 2.8.4. Store Detectives………………………………………………………………………………….……..27 2.8.5. Peer Reporting………………………………………………………………………………………… 27 2.8.6. Loss Prevention Technology…………………………………….………………………….….28-‐30 2.9. Fake Cameras ………………………….……………………………………………………………….….30 2.10.Ceiling Mirrors …………………………………………………………………………………………...30 2.11. Free Products and Gifts……………...…………………………………………………………….…31 2.12. Staff Training………………………………………………………………………………..……..……. 31 CHAPTER 3 3. CROSS COMPANY ANALYSIS 3.1. House of Fraser…………………………………………………………………………….……..……. 33 3.2. Best practices Adopted by House of Fraser…………………………………………...……. 34 3.2.1. Best practice to Reduce Internal Loss………………………………………………...…. 34-‐36 3.2.2. Best practices to Reduce External loss…………………………………….…………….. 36-‐39 3.3. Primark………………………………………………………………………………………………….….. 40 3.4. Best practices Adopted by Primark ………..………………………………………………….41-‐42 3.5.SWOT Analysis…………………………………..………………………………………………………43-‐45
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CHAPTER 4 4. Analysis and Interpretation…………………………………………………………………………..47-‐48 CHAPTER 5 5. SUGGESTIONS AND RECOMMENDATIONS 5.1. Avoid Internal theft…………………………....………………………………………………………….50 5.2. Avoid External Theft………………………………………………………………..…………………….51 5.3. Recommended Best Practices………………………………………………………….…………….52 5.4 Reason for Choice……………………………………………………………………………………….53-‐54 6. APPENDIX 6.1. Bibliography………………………………………………………………..…………………………….55-‐59
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Executive summary
Executive summary summarizes the overall company
report. Each chapter is briefly described in this section. The company report includes an
introduction, literature review, best practices of house of Fraser and Primark, analysis and
interpretations, recommendations and conclusion.
The introduction includes the objective of the study, purpose, background of
the study and different source of data. The researcher is concerned about the stock control
practices, which concentrated on stock loss due to internal and external theft. One of the main
problems faced by most of the companies.
In this report the researcher is trying to make an effort to compare and
analyze the internationally accepted best practices in stock control. House of Fraser a U.K
based company and Primark an Irish based company are the two companies considered for
this study. The researcher has gone through the best practices adopted by the international
companies to reduce the internal and external theft. Clear information about house of Fraser is
got through an in-‐depth interview with the line managers and security officers. The company
currently employs the researcher, which gives more information from personal experience.
The remaining information about the company is collected through intranet and the company
journal. A thorough study about the best practices adopted by Primark is done through in-‐
depth interview with the H.R. manger and through secondary research. The secondary data is
collected through Internet, company website, journals and magazines.
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The author has done a thorough analysis on the best practices
adopted by House of Fraser and Primark. A parallel comparison with the internationally
accepted principals gives a clear interpretation on this subject. House of Fraser and Primark
have an outstanding performance on the adoption of security system to prevent internal and
external loss. However, even after the adoption of these security measures house of Fraser is
suffering from heavy losses.
From the analysis of the study, it is clearly derived that house of Fraser and
Primark have many drawbacks in the adoption and management of the security measures.
Loss can be reduced through different methods, which is explained in this report. In this
report, author adds many recommendations to overcome the drawbacks of stock control
practices.
The report is submitted in anticipation with the company, that they will
consider the report and do proper amendments to reduce the internal and external theft in
the company. They will make the company activities to international standards.
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. INTRODUCTION
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INTRODUCTION:
This is a company report, created as a part of the MBA course of Griffith
College. This report is based on the best practices adopted by companies to reduce stock loss. A
cross comparison has been done between House of Fraser and Primark (branded as penneys in
Ireland). The researcher is trying to compare the internationally accepted best practices with
the companies.
1.1.BACKGROUND OF THE STUDY:
A personal experience in the working place, is the motivation for the researcher
to choose this subject. As an employ in house of Fraser, the importance of reducing the stock
loss in the company come in to notice. The information about the companies is collected
through informal interviews with the line managers and through the company manuals.
The author is employed in House of Fraser Dundrum, which gives more
access to the information. The need for, improving loss prevention method come in to notice
through stock-‐taking. House of Fraser is presently suffering stock loss in all their stores. The
author recognized the importance to improve the methods to avoid stock loss, which is a great
loss to the company. Currently the company is trying to improve its security measures and the
author is trying to support the company.
1.2.OBJECTIVE:
The objective of the study is to understand the best practices adopted by the
companies to reduce stock loss. Through a cross company analysis, it is trying to understand
the companies’ adopted methods to reduce stock loss. This provides, a realistic remedy to the
company to reduce stock loss.
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1.3. SOURCE OF DATA:
The source of the data for the literature review is collected through books, journals, and
websites. The company information about house of Fraser and Primark is collected through
informal interviews with the line managers, company manuals and the information provided
through intranet. All the secondary data is collected from articles published in well-‐known
journals and books.
1.4. PURPOSE OF THE STUDY:
The main purpose of this study is to provide a solution to the problem, which is
facing by House of Fraser and Primark. This helps to improve the reduction in the stock loss,
which helps the company to develop to world class standard.
In addition to this, the author is considering the study as a
contribution to the company. This helps to enhance the knowledge of the author about a well-‐
known problem facing by the companies.
1.5.ABOUT THE STUDY:
This study is trying to explore the reasons for retail shrinkage, the
different ways of stock loss, the best practices adopted by the companies to reduce stock loss
etc. In this study the cause of the retail shrinkage is explained thoroughly, with supporting
evidence. The remedial measures, adopted by the companies are explained in the remaining
chapter.
The best practices adopted by different companies are derived through literature
review. This gives a supportive evidence to compare the best practices adopted by House of
Fraser and Primark. Through SWOT analysis, two companies present position in the retail
market is explained.
The suggestions and the recommendations are the best practices derived through the
study. The adoption of these methods will help to reduce stock loss to a limit.
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LITERATURE REVIEW
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2. INTRODUCTION:
In this chapter the researcher discussed about shrinkage in retail
sector. This explained the different types of shrinkage. The different reasons of
shrinkage, helped to understand, how shrinkage occurred in retail sector.
In this chapter the researcher explained the internationally adopted best
practices to reduce shrinkage. In this whole study, it was describing the internal and
external factors of shrinkage and the remedies adopted by companies.
A route through this chapter helped to understand, the importance to
adopt best practices to reduce shrinkage in companies. This part of the study also gave
compact information of the losses suffered by companies due to internal and external
theft. The whole research was based on the main factors of shrinkage; therefore the
literature review gave information to support this point.
All the below details were well supported by reference. All these literatures
helped to understand the most efficient loss prevention tools, which were successfully
accepted and established.
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2.1.SHRINKING SHRINK:
Shrink is an intimidating problem for all retailers and suppliers. Studies
done by efficient consumer response Ireland reveals that, the annual global losses
comes around $232 billion and the cost of managing shrinkage comes $46 billion. That
means, the total cost comes around $278 billion. In Ireland alone the annual shrink
estimates €453 million, which is equivalent to 101 million Guinness.
The efficient consumer response survey Ireland revealed that the potential
retail margin for Irish retailers come up to 4.64%. But, currently the retailers are
getting only 2.99%. This figures revealed that the retailers are suffering a missed profit
opportunity of 1.65%.
(Beck.A., Peacock.C.& O'Neill.H., 2010)
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2.2.DEFINITION:
SHRINKAGE:
Shrinkage is defined as’ “the amount of merchandise that has disappeared through
theft, has become useless because of breakage or spoilage, or is unaccounted for
because of sloppy recording”. (Purpura.P., 2005)
The researcher is discussing the strategies to reduce shrinkage. The studies are
showing that an average retailer spends slightly more than half of a percent of its
annual sales revenue on security and loss prevention. (McGowan,D.,2004)
2.3. HOW SHRINKAGE IS OCCURING?
Many surveys have conducted to find the causes of retail shrinkage. There are
different reasons for shrinkage; we can mainly divide it to internal and external
shrinkage. Internal and external shrinkages are the challenges facing by all retail Unit.
The following table shows compact details of different surveys conducted to find the
causes and the intensity of retail shrinkage. It concluded that main causes of retail
shrinkage are internal and external theft. Internal and external theft came up with almost
the same figures. Then came the process and the inter company fraud.
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(Beck.A., Peacock.C.& O'Neill.H., 2010)
According to National retail research group, the main
reason of shrink came from employee theft. A study conducted in 2006 in supermarkets
revealed that employee theft was 56%, shoplifting 21%, receiving 10%, retailing pricing 5%,
accounting/administration 4% and damaged goods comes 4%. The national retail security
survey also disclosed that, employee theft was the single most significant source of inventory
shrinkage in all the previous NRSS studies. The second largest source of inventory shortage
was loses through shoplifting. (Hollinger.R., 2007)
All these studies are showing that the main causes of retail shrink is through
employee theft and shoplifting. The researcher is trying to understand the best practices to
reduce retail shrink, concentrating on these two causes.
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2.4.INTERNAL SHRINKAGE:
According to the study done by retail research, internal
shrinkage is more than external shrinkage. Internal shrinkage is due to theft done by a store
or employers or employees. This includes collusion between employees and friends or
relatives, suppliers, vendors and administrative staff. (Dempsey.S.J.,2008)
2.5.EXTERNAL SHRINKAGE:
External shrinkage is caused by theft done by outsiders,
generally shoplifters. A study done on 166,000 shoplifting incidents in 101 retail firms
showed that health and beauty products, over the counter medication and CD’s were the
main products being stolen. Discount, department stores and supermarket retailers are the
highest apprehension rates of shop lifters. Security officer’s reported that, an average
shoplifter caught with about $200 worth products.(Lamba.A.J.,2003)
2.6. REASONS OF SHRINKAGE:
There are different reasons for shrinkage. Different companies have
adopted different methods to reduce shrinkage. Before the adoption of best practices to
reduce shrinkage, the companies have to understand, how these shrinkage is occurring. The
below details are explaining the main reasons for shrinkage.
2.6.1.SHOP LIFTING:
The second largest source of inventory shortage is through shoplifting.
According to UK’S center for retail research found that, Ireland ranked 11th out of the 22
countries in Europe for shoplifting. A survey done in 21 retailers,(358 stores ) in Ireland
showed that, the Irish shops have a loss of €453m or 1.38% of annual sales loss. With in
a time period of 12 months, there was an increase of 39% of shoplifting in Ireland. CSO
figures indicated that the retailers in Ireland are suffering a slump of 10% sales in
September 2009 when compared to the previous year. Recession also, acted as a major
factor for this slop. (Monaghan.G.,2009)
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The main techniques of shoplifting are explained below.
• HIDING THE MERCHANDISE
• BRAZEN APPROACH.
• DISTRACT STORE PERSONAL.
HIDING THE MERCHANDISE;
This is one of the main techniques used by shoplifters to steal merchandise from the
shop. Hiding products in different places;
• Baby carriage or strollers
Hiding the merchandise objects under blankets, toys and other things.
• Umbrellas with handles:
Umbrellas closed but not snapped on their elbows, drop item in to it while leaning
The counter.
• Cratch carring:
Women wearing long skit or coat and men with long coat do this.
They place the merchandise between their thighs and walk away.
• Using baby cloths and newspapers to hide stolen items. Some of them make slits in the
lining of the pocket, so that they can reach the merchandise with out being seen.
• A large open bag: The bag is placed on thieves’ feet and drops the objects in to it.
• “Bag bag” holding a paper bag which is dirty and keeping the things inside it.
( Tian.K. & Keep.B.,2002)
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BRAZEN APPROACH:
• Some robbers steal the garments by putting it under their own clothes from fitting
room and walk away.
• Another way is, they took the clothes from racks, which is near to the door and walk
away.
• Some customers boldly walk away with large items that do not put in an ordinary bag.
• Robbers just grab the things and walk away relying on the unawareness and slow
response of the sales advisor. (Dempsey.S.J.,2008)
DISTRACT THE SALES PERSON:
This is one of the common methods adopted by the robbers to steal things
from the shops.
• A large group of people will enter to the store and divide to different small groups,
which makes it difficult for the employees to watch.
• Pair of shoppers enter to the shop one of them will distract the sales person and
the other will steal the thing.
• If there is only one employee in the shop, they will send the sales person to the
back room to find something and steal the things and the leave the shop before
they are coming back.(Hess.M.K.,2008)
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2.6.2. EMPLOYEE THEFT:
Employee theft is the biggest threat facing by all companies. Studies shown that, employee
theft itself accounts for nearly half of the inventory shrinkage. This shrinkage is more than
the shoplifters, administrative errors and more than vendor fraud. (Bond.R.,2007)
There are three main factors, which influence employee fraud,
1) Situational pressure (financial or status need)
2) An opportunity to commit and conceal a crime.
3) A way to rationalize the dishonest act.
Some employee’s steal for status or to cover extra expenses, the inadequacy, or the
inequity in the compensation is another factor.
(Moorthy.M.K.,Seetharaman.A.,Somasundaram.N.K.&Gopalan.M.,2009)
A survey done in the Irish retail market revealed that, Irish shop workers
are the worst shoplifters. There is a loss of €167m in goods and cash a year, which is the
worst rate in Europe. Employee theft create 36.8% shrinkage in Ireland, this is the highest
rate in Europe. The shop workers itself steal items worth 166.7m. (Monaghan.G.,2009)
According to the research done by G4S Secure solutions revealed
that, in the last 12 months around one in the ten retail employees committed a crime
against their employer. The loss due to employee theft can make a dramatic impact on
retailer’s revenue (Greenwell.D.,2010)
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2.7.BEST PRACTICES ADOPTED BY COMPANIES TO REDUCE EMPLOYEEE THEFT:
The adoption of best practices to reduce employee
theft depends up on the rules and regulations of the company. The following methods are
the common best practices adopted by companies to reduce employee theft.
In order to, avoid employee theft, it has to consider
from the initial state of recruitment. Employee has been hired only after checking their
personal and professional background. The criminal history has to check, to understand
the crimes involving, violence, theft, and fraud. Education verification helps to understand
the verification of the degree from the accredited institution. The employment verification
gives more idea about the positions, length of employment and the reason for leaving the
job. (Bond.R.,2007)
A positive work environment encourages the
employees to see themselves as an important part of the organization. This is an effective
deterrent to employee theft. Fair employment practices, rules and regulations, proper
employee recognition, open lines of communication between the management and the
employees reduce the likelihood of internal theft. (Scarborough.N.M. & Zimmerer.T.,2003)
Proper education and training have been
given to the employees about the policies and procedures related to fraud. The
organization’s code of conduct and ethic policies has been clearly explained to them. The
crucial factor is that, the company has to explain, how the violation of these policies will be
disciplined.(Fischer.R.J.& Janoski.R. ,2000)
The company has to investigate the entire incident; the violations
of policies and procedures, the allegations of fraud or the warning signs of fraud will help
to reduce losses. (Cook.L.,2009)
All these above methods help to reduce employee theft to an extent.
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2.8.BEST PRACTICES TO REDUCE SHRINKAGE:
Different companies have adopted different best practices to
reduce shrinkage. A combination of different loss prevention methods acted the best to
reduce shrinkage. The loss prevention methods and technique include CPTED (crime
prevention through environmental designs), management policy and operations, internal
and external audits, use of store detectives or loss prevention specialists, peer reporting of
suspicious or criminal activity. Non-‐ technology loss prevention tools include, observation
mirrors, locking antitheft cables and wires, wire lanyards, security bars and other devices.
Introduction of technology for loss prevention methods includes, closed circuit
television (CCTV), benefit denial tags (ink tags) Electronic article surveillance (EAS), source
tagging, computerized inventory control, radio frequency identification (RFID) and DNA
tagging.
Security officers act as a main part in store’s loss and prevention methods.
These loss prevention methods can be overt o covert. Overt security means security means
are visible to all customers. These include visible cameras, locking equipments, security tags
and uniformed security officers. On the other hand, covert security means hidden cameras,
in store detectives wearing plain clothes and shops with the customers.
2.8.BEST PRACTICES TO REDUCE RETAIL SHRINKAGE:
1. MANAGEMENT POLICY
2. CPTED
3. AUDITS
4. STORE DETECTIVES/LOSS PREVENTION SPECIALISTS
5. PEER REPORTING
6. LOSS PREVENTION TECHNOLOGY
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2.8.1.MANAGEMENT POLICY:
Introduction of a strong management policy which
increase the employee awareness and participation in managing the problems helps
to reduce shrinkage. Studies done on shoplifters are revealing that, shoplifters are
less likely to steal from shops, which has a strong management policy. These
management policies mainly include motivated store personal, organized displays,
presence of store detectives and store personals regularly approaching and
acknowledging customers.
The internal loss in the retail sector is mainly due to employee
theft. This can be controlled mainly through good management techniques and
through very intelligent security policies.
• Honest employee is an asset for the organization. So the management has
been careful from the first stage of recruitment. The employer has to check
the previous employment background, conduct a background check and do
an in depth application interview.
• One of the main factor which prevents the theft to a certain extend is the
salary and the wages to the employees. More stealing are common in places
where the employee are underpaid rather than overpaid.
• Al employees have to feel that, they are an integral part of the organization
and their service is a valuable part of the organization.
• The company’s code of ethics or company policies should be clearly defined to
the employees, from the initial stage of employment. Policy explains the
expected ethical standards from the employees and the consequences of
violating it. (Fischer.R.J.& Janoski.R.,2000)
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2.8.2.CPTED( Crime prevention through environmental design.)
Crime prevention through environmental design means designing the shopping
environment in such a way, which prevents theft. CPTED involves designing the
inside and outside the building, entrances and exits, landscaping and lighting to
increase the detection of stealing.
The three main strategies used for CPTED involve, territorial reinforcement,
natural surveillances and natural access control. In territorial reinforcement, a border is
created between public and private property, which creates a feeling of territory. This
makes it easy to give message to the offender that the property is under the ownership of
somebody else and the offender has to keep away from the place. In natural surveillance
involves designing the environment to improve lighting and landscaping, which improves
the observation inside and outside the store. Natural access control makes the business or
property a riskier crime target, with doors, fences, and gates. (Crowe.T.D.,2000)
2.8.3.AUDITS
Audits are a tremendously important loss
prevention effort. Audits can be done both internally and externally. Internal audits are
done by store’s own personal and people who are hired by the company do external audits.
Audits on inventories help to find out the shrinkage in the company as well as the person
who is responsible for the theft and losses. More often, the audits are the quicker to find
the shrinkage. Regular audits helps to prevent the theft, as the theft and the losses will be
liable to the person in charge. So, more care will be taken by the person in charge to avoid
theft and losses.( Sennewald. C. A & Christman.J.H., 2008)
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2.8.4.STORE DETECTIVES / LOSS PREVENTION SPECILISTS:
Many of the large companies have there own loss prevention
department and they employee these people for investigation. Store detectives are also
called LP agents. The main duties of store detectives are to control the shrinkage. They
have different duties, which includes employee investigation specialist, auditors, payroll
trade off for capital expenditures in system and technology. (Sennewald.C.A &
Christman.J.H.,2008)
According to Dan Doyle, the chairperson of national retail federation loss prevention
council, loss prevention specialist works as the internal police of the organization. The loss
prevention specialist investigates the internal and external theft of the assets. They are
responsible to investigate the employees and the customers who are destroying the
company property, stealing cash and merchandise. They also investigate the crimes and
activities acting against the company. Many companies have implemented peer reporting
hotlines and incentives. (Crowe.T.D.,2000)
2.8.5. PEER REPORTING:
A study done in 2004 reveals that peer reporting is one of the most effective
techniques to detect and prevent employee theft. Many major security service companies
are assisting organizations for peer reporting programmes. “Alert line ethics and
Compliance Hotline, offered by Pinkerton investigative services and Safe to say Hotline
services are offered by Wackenhut are the two examples. Employees can report to these
organizations and information will be received back to the company. (Dempsey.S.J.,2008)
28
2.8.6.LOSS PREVENTION TECHNOLOGY :
(a) EAS (Electronic article surveillances)
According to the national supermarket research group, around 25 % of the
shrinkage in supermarket is through shoplifting. Statistics from the supermarket shrinkage
shows that, there is a 13 percent reduction in shrinkage in stores, which implemented EAS
technology. EAS has many elements in success factor. The sensor are moisture resistant, it is
very thin which remain inconspicuous. This EAS system, stand up to both freezer and
microwave with out interfering the quality of the product. (Litwak.D.,2005)
According to the national retail security survey, most of the retailers
have adopted EAS system as a successful loss prevention method. These retailers are
realizing that shoplifting is the second most costly source of shrinkage or theft in retail. The
supermarket shrink survey reveals that the top cause of shrinkage in stores is due to
employee theft. Companies, which installed EAS system, are saving more money than the
one, which are not. (Ennen.S.,2009)
(b) RFID (Radio Frequency Identification)
According to Avery Dennison, the introduction of RFID system in Gerry Weber
fashion and Lifestyle Company is extremely successful. This system helps to reduce theft and
ensure stores are well stocked with popular items. The RFID fabric care cables are applied in
the manufacturing process, this avoids the retail staff to fit and remove the conventional
bulky tags in the store. In addition to this, these tags are automatically deactivated after the
consumer paid for the item in the check out. The RFID inlay is incorporated with a care label
which is washable up to 140° F and can be dry-‐cleaned. This helps to trace back the garment
from the production to the point of sales, even if it is washed or dry-‐cleaned. (Dennison.A. ,
2010)
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( c) CCTV(Closed Circuit Television)
The installation of CCTV was found being positively correlated
to prevent retail crime. This has become the principal weapon in fighting against shop
crime. CCTV acts as a day and night surveillance with an unparalleled capacity to detect the
offender. Studies done in retail stores revealed that, the installation of CCTV in retail reduces
the loss to sales from 2.45% to 1.97%. The studies are showing that there is a massive
reduction in the stock loss after the installation of CCTV in stores. After 6 months there is a
reduction of 37.8% stock loss from stores, which installed CCTV. (Beck.A. & Willis.A.,2000)
A survey conducted in 2004 in seventeen stores revealed that,
stores with more CCTV operators reaped more benefits when compared to stores who are
not using CCTV. These stores benefits in terms of high theft discovery rate, great security for
the store, higher stock recovery rate and reduced losses. (Beck.A. & Willis.A.,2000)
According to Rutgers’ crime prevention service, CCTV can prevent and
deter crime because of deterrence, prosecution, fear reduction, monitoring, and intervention.
Deterrence means that, the shoplifters may see the cameras and leaves the target due to the
impression of high risk. Fear reduction means the presence of camera creates a safe feeling in
and around the store, which prevents the potential criminals from attacking. Robbers and
shoplifters may be observed in camera and can then be catch and prosecute with evidence. In
monitoring and intervention, the security guards can monitor the suspicious behaviors and
prevent the crime from occurring. They can also be assisted with a member of staff.
(Dempsey.S.J. , 2008)
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(d) DNA Tagging:
This is one of the emerging anti-‐shoplifting or anti-‐counterfeiting
technologies that use microscopic fragments of DNA. Jun-‐Jei Sheu, a Taiwanese scientist
started the research with microscopic fragments of DNA embedded in everyday objects.
(Dempsey.S.J. , 2008)
In 2005, UK firm, Red web security has developed a DNA tagging
product. It is called a biosynthetic ‘ipowder’. This works on a pretty simple concept. These
ipowder carries a “uniquely traceable DNA code” registered to the owner or a precise
location. This ipowder can be immersed in a device, which can be mounted in the ceiling,
front door or on the wall. This powder suspended in a red dye sticks to the clothes and skin
and cannot be removed for several weeks. This helps to trace the person or the merchandise
products. (Haines.L., 2005)
2.9. FAKE CAMERAS\ DUMMY CAMERAS:
A study done on employee theft revealed that the presence of a fake camera
has a positive effect on employees, which reduce employee theft. The cameras look real with
red lights and cosmetically it looks identical to the real ones. The presence of this camera
can deter theft. Only trusted employees must know the reality of these fake cameras. The
fake camera cost less when compared to the real camera. The survey is suggesting fake
cameras as a supportive tool for CCTV to detect staff theft. (Alstete,J., 2006)
2.10.CEILING MIRRORS:
A study done on retail shrinkage suggested ceiling mirrors as one of
the cheapest tool for loss prevention. The mirror helps the investigators to watch the
activity in high theft area. In some departments the mirrors are used to increase the range of
their camera. (Carter.N.,1995)
31
2.11.FREE PRODUCTS AND GIFT:
Companies have proved that giving free products and gifts to the employees
reduces employee theft. Chicklets gum factory in Queen reported employee theft in the
company. Many of their staff steals the products. The packages are small and easy to remove
from the factory. The management kept 55-‐gallon of drums at the employee entrance with the
products inside. The employees can take whatever they want from the drums. The drums
hardly used and the theft stopped as well. This is a great example to show that giving gift can
reduce employee theft. (Alstete,J. ,2006)
2.12.LOSS PREVENTION STAFF TRAINING:
A survey done by KPMG on the stock loss in retail sector revealed the
importance of staff training to reduce stock loss. Companies in America are giving training
monthly or quarterly. Half of the companies in Asia pacific region and almost half in EMEA
(Europe, middle east and African region) train annually. (Larson.M.,2009)
An alert and well-‐trained staff is the sole for good crime
prevention. Investing in staff training is not an expensive loss prevention method. Refreshing
the staff memories through 15 minutes meetings helps to keep the staff alert. The companies
will get proper advice through business crime reduction partnership, crime prevention
officers, trade association and trade newspapers. (Dear.L.,2009)
32
CROSS COMPANY ANALYSIS:
33
3.CROSS COMPANY ANALYSIS
3.1.HOUSE OF FRASER
About the company:
House of Fraser is one of the UK’S largest and most
prestigious retail organizations. This is a British department store, with around 62
stores across UK and Ireland. This is founded by, Hugh Fraser and James Arthur under
the brand Arthur and Fraser in Glasgow, Scotland by the year 1749. It has a long
strategy of rebranding the name to House of Fraser. House of Fraser has acquired
different companies including T. Braid & Sons Ltd of Scotland, Erie and E. Dingle & Co.
Ltd, Hide & Co and the Army & Navy Stores in southern England, Switzer & Co. Ltd,
Dublin and other independent stores. Over the decade more than 50 stores joined the
group.
The head quarters of House of Fraser is in London,
England. By the year of 2008 the company operates 63 department stores in UK and
Ireland including the web store www.houseoffraser.co.uk. House of Fraser is providing
different products in the store, which includes jewellery, cosmetics, clothing, home-‐
ware and kitchen gadgets. House of Fraser has revenue of £ 596 million, which
operates with around 2000 employees.
In the year September 2005, House of Fraser has opened its first store outside UK
is in Dundrum Town center, Dublin, Ireland. The company provides the same standard
of products and services to the customers in Ireland. This store operates with around
200 employees. This store operates under the same rules and regulations as in U.K.
34
(3.1) SHRINKAGE IN HOUSE OF FRASER DUNDRUM:
House of Fraser Dundrum is reporting an annual loss of € 89,528
in 2009. The company suffered an internal loss of 24.4% and an external loss of 57.6%
in the store. In addition to this, the company declared a loss of 1% due to fraud, 1%
due to robbery, 3% due to damage and 13% loss due to others. House of Fraser is
reveling that the major loss of the company is through shoplifting from fitting rooms.
These above figures are showing the importance of adoption of best practices in house
of Fraser.
(3.2) BEST PRACTICES ADOPTED BY HOUSE OF FRASER:
House of Fraser has adopted the same loss prevention methods in all
stores. They have different security policies for opening and closing the store, interior,
and exterior checks, booking staff in and out the store etc.
In this context we are discussing the main security measure adopted to reduce
internal and external loss.
(3.2.1) BEST PRACTICES TO REDUCE INTERNAL LOSS:
(A) STORE OPEING AND CLOSING:
House of Fraser has adopted specific procedures for opening and closing the store to
avoid theft by staff and intruders.
• It is the company policy that an authorized key holder and at least one staff member of
the management or security must present when opening and closing the store.
• The security must not hold store keys or be asked to set the intruders alarm at
closedown.
• Person who enters a store on his or her own risk, without a cause may be liable to
disciplinary action.
35
(B) STORE KEY CONTROL AND ALARM ACCESS PROCEDURE
• It is the company policy that there should be only four sets of keys. Each key holder
Is responsible for the security of the key while in possession.
• Authorized key holder can access to the alarm panel and they can choose their own
PIN number. The PIN number is on personalized choice and this not recorded anywhere.
• None of the authorized person is allowed to reveal the PIN number under
Any circumstances.
• The PIN number must be deleted when the authorized person leaves the business
Alternatively, transfer to another store.
(C) EXTERNAL AND INTERNAL CHECKS
• The key holder upon arrival does a visual check of the accessible perimeter
Of the premise.
• Extreme care must be taken when there is any damages taken place.
• The security has check all attempted burglary. The fire exits must always
been kept clear and operational.
(D) FINAL PREOPENING CHECKS:
After the internal and external check the security will do a final preopening check.
• Make sure that the CCTV system is fully operational and that the correct tape is
Inserted and recording is properly working in each videocassette recorder.
• Make sure all display cabinets and windows are locked with the keys removed.
36
(C) STAFF SEARCHES:
As a condition of employment any person engaged in work on company
premises must accept that they are liable to be searched as and when requested.
Searches will be carried out regularly. HOF staff, concession staff, cleaners, and
visitors will be scheduled at random searches.
The quality of the searches being conducted should be in line with
current audit guidelines. Bags personal belongingness etc can be searched at
anytime when the staff is inside the premises. Lockers cabinets and cars can be
searched at anytime in the presence of the person. It is the responsibility of the sales
manager and loss prevention manager to ensure that regular checking is conducting.
In the event of person being found with an
unauthorized possession of company property during staff search senior
management must be contacted immediately. If it is a work experience trainee or
employment trainee concerned agency or respective sponsor will be informed.
Correct course of action must be taken according to the human resource manual.
(D) INTERNAL LOSS PREVENTION INVESTIGATION:
An internal loss prevention investigation is conducted when it is identified
that the employee is suspected.
• Acting criminally against company’s interest.
• Benefiting financially or materially, from a loss to the company caused by a
breach of operational procedure.
• Failing to comply with company procedures and policy.
37
(3.2.2) BEST PRACTICES TO REDUCE EXTERNAL LOSS:
HOF has implement different loss prevention methods like CCTV,
monitoring service, Electronic article surveillance (EAS) etc.
(A) FITTING ROOM SECURITY PROCEDURE:
One of the main losses of merchandise pieces takes place in HOF is from
fitting rooms. So the company has established certain procedures to avoid theft from
fitting rooms.
• All fitting rooms must be kept clean and functional.
• All cleaners including contract cleaners must be under supervision.
None of the merchandise product will be allowed to taken by the cleaners.
• None of the fitting room cubicle, must not be used as storage space under
any circumstances.
• Fitting room must not be kept in such a way as stock room doors or fire exits
are accessible for public.
• Regular check of the fitting room is done to ensure that no article, ticket,
hanger etc left unattended.
• Disk control system must be fully equipped for all stock room.
• All fitting rooms will be manned all the time.
38
(B)) Electronic article surveillance (EAS)
House of Fraser has implemented an anti theft solutions from the
point of sales. EAS antennae are helping the retailer to reduce theft in the stores. The
technology incorporates 360degree rotation of radio frequency signals, which helps
in a better detection of Radio frequency security tags at all angles. This helps the
retailers to detect the stolen merchandise effectively. This system offers fewer
pedestals but, wider aisles (around 2m), which preserves and keeps the look of retail
environment. House of Fraser is using, Alpha Cable Loks, from alpha high theft
solutions are being trailed to combat the theft of desirable and high value
merchandise such as handbags, jackets and suits. (Thompson.S.,2009)
The implementation of checkpoint’s security solutions, reduce losses on high-‐
end goods, improved stock results in the store and concession. This creates a very
pleasant retail environment to the customers and the luxury merchandise can be kept
securely on open display.
In addition to the EAS technology, House of Fraser has also
installed EAS enabled version visitor counting software. Checkpro manager Visiplus,
provides an insight to the number of visitors to its stores. This information is captured
and stored which allows the managers to analyze the information online. This helps
them to determine the specific areas, which need more staffing and helps to measure
the promotional campaigns in attracting customers to the store. This data can be used
to make a customer conversion rate reports. Visplus develops quantitative data, which
allows HOF to identify the areas for improvement and reduce cost.( Marc.P.,2009)
39
(C) EPOS Scan : ( Electronic point of sale)
EPOS scan is tried and tested system specifically developed for and proven
to be effective in retail applications. Epos Scan is on the idea that it links to CCTV
coverage with EPoS data from the sales terminal. It is a particular event like void or
refund takes place. EPOS scan ensures that images of the sales terminal relating to this
event are recorded. The images are recording with a fixed camera permanently trained
on the sales terminal, or it may orient a PTZ (pan tilt zoom) camera near the sales
terminal, which captures the required picture.
In addition to the store’s main coverage EPOS system can
be used as a recording system. EPOS audit roll data corresponding to the event being
monitored, maintains a searchable log of events types and locations. In House of Fraser
the typical event which monitors include voids, manually keyed credit card sales and
low value transactions in departments where the goods on sale are mostly of high
value. EPOS scan helps to identify suspicious transactions by reviewing EPOS audit roll
information along with CCTV images of the sales terminal. The Epos scan instantly
brings the target event to the notice of the security staff, which helps to watch the
whole transaction as it is happening. This is a very effective and efficient tool in
reducing shrinkage.
All these above details are showing the different methods adopted by
House of Fraser to reduce shrinkage due to internal and external losses. Even after
with the adoption of these methods House of Fraser is suffering from a loss of € 89528.
This figures are showing that, they need an improvement in the adoption and
application of security measure.
40
(3.3) PRIMARK.
About the company:
Primark is a clothing retailer, which is established in the year
1969. The company has branches in Ireland, United Kingdom, Netherland, Germany,
Spain, Portugal and Belgium. The company operates with its head office in Dublin,
Ireland. The company has 38 stores in Ireland, 136 in UK, 14 in Spain, 2 in Germany, 2
in Portugal and 1 of each in Netherland and Portugal. Primark is a subsidiary of
Associated British Foods plc (ABF) and under the control of Weston family. In the year
2008 the company makes revenue of £1933 m. It employs around 27500 staff all over
the stores.
The main principle of the company is to market fashionable clothing at a
competitive price. In addition to clothing it also provides a wide collection of home
ware, jewellery, foot ware, health and beauty, Christmas products, giftware, sports
ware and accessories to the customers.
In 2006, Primark joined the ethical trading initiative, which brings
businesses, NGO and trade unions to work on honor right issues in their supply chains.
Primark took remedial measures to avoid unethical practices in their supply chain.
They terminated the contract with the companies doing child labour and unethical
practices.
SHRINKAGE IN PENNEYS DUNDRUM:
Penneys is reporting a very small percentage of internal and external loss
in their store. The managers are revealing that Primark have only 1%to 2% of internal
loss in their store. Penneys is suffering from an external loss of €1000 to €2000 per
month. CCTV is their prime loss prevention tool in all stores. The store detectives are
acting as a supportive tool for the CCTV operation.
Detailed explanations of the loss prevention tools are explaining below.
41
(3.4) BEST PRACTICES ADOPTED BY PRIMAK TO REDUCE SHRINKAGE:
(A)SECURITY SERVICES:
One of the best methods adopted by Primark to reduce internal and external theft
is through security services. The company is providing the customers a comfortable
and safe shopping environment. Primark has outsourced it’s security from a trusted
agency. This security officer provides a wide range of services.
The security officers in Primark monitor both the
customers and the staff during working hours. They discourage and avoid
troublemakers, which provides an exciting shopping environment. They always act as
deterrent against theft by customers and staff. The security officers are obliged to
analyze the incidents or theft, which makes a loss to the company and make arrest if
necessary. They provide information services to the management. The security officers
will provide a great assistance in collecting money from different tills. In Primark, in
addition to these services the security is giving first aid if necessary. The security
offices are always vigilant to find the losses done by staff and customers.
(B) STORE DETECTIVE OR SHADOW SECURITY:
One of the best practices adopted by Primark for loss and prevention
method is the introduction of store detectives. They patrol the shop like an ordinary
shopper, watching for shoplifters. These detectives follows the shoppers behaving
suspiciously to make sure if they are doing any theft or not. These store detectives
investigate employee theft activity, credit Card and check fraud. They are responsible for
searching employee lockers and bags randomly.
42
(C)SECURITY STICKERS:
Penneys has introduced different criteria to avoid losses from their home
ware department. All the items that were sold from home ware department have been
accompanied with a sold out stickers. None of the merchandise items are allowed to
move out from the store with out these stickers. These stickers are mainly used as an
identification tool to recognize between a sold out item or not. These stickers make the
job of security officers quite easy.
(D) CCTV (CLOSED CIRCUIT TELEVISION):
In Primark, CCTV acts as the major tool for loss prevention. This helps in
investigating shoplifting, credit fraud, embezzlement etc. In Primark they have
installed different units for controlling CCTV. Some of these units are visible to the
customers and some are not. CCTV give the security officers a better view of a suspect,
they can record incidents with out revealing themselves to the shoplifting suspects.
The application of CCTV in Primark gives assistance to the store vigilant working in the
shop.
43
(3.5) SWOT ANANLYSIS:
In this part of the study, the researcher is trying to do a cross company
analysis between the two companies. SWOT analysis has done to understand the
strength weakness, opportunities, and threats of the company.
(3.5.1) SWOT ANANLYSIS OF HOUSE OF FRASER;
STRENGTHS:
House of Fraser have been thriving business since 1749, it has 62 shops
in and around UK and Ireland. It has great strength for its private label and wider
brand portfolio across fashion, beauty, children wear, and home values. House of
Fraser is well known for providing a collection of different branded products at high
quality. They are providing every imaginable brand available in the market. They
have a very strong portfolio of brands. The store is providing a lot of staff for assisting
the customers. They have a strong infrastructure. House of Fraser is providing a store
card to the customers, it is giving rewards to the customers on the basis of the
amount of points acquired in each quarter of the year. In addition to this, the
cardholders will get extra 10% discounts for everything they buy. Through all these
ways house of Fraser is trying to get a good place in customer’s mind. (Papas.C.,2009)
WEAKNESS:
Some of the customers are considering house of Fraser as an
expensive store. House of Fraser has spent a lot of money for the adoption of loss
prevention methods. However, still now, House of Fraser is suffering shrinkage due to
internal and external theft. In this store, the external loss is greater when compared to
the internal losses. the company is suffering a loss of around ninety grants in just one
store (Marc.P.,2009)
44
OPPORTUNITIES:
House of Fraser is a well-‐known department store, whose
main income is selling. The main cause of loss for the company is through external
loss. If the store is over coming this weakness, they can save a good lot of money. The
store can earn more money through improving online sales. The store has it’s own
website, through which they can earn more profit.(Randall.C.,2008)
THREATS:
The intensive competition in the market is a
great threat facing by House of Fraser. They company has to adopt new strategies to
overcome this. With the hit of recession in the retail market, consumer confidence has
decreased. Studies have also shown that recession increased retail theft. Therefore,
the company has to give more importance to reduce theft. House of Fraser is
providing a variety of branded products; counterfeit products in the market are a big
threat for them. (Dey.S. & Srinivasan.S.,2007)
(3.5.2)SWOT ANANLYSIS OF PRIMARK:
STRENGTHS:
Primark is a well-‐reputed firm, which is established in the year
1969. This has around 193 outlets. They have a very strong market position. The
main aim of Primark is to provide low price and good quality products. They have a
very strong returns and margins from their business. Primark has a very strong
distribution network, which is providing the same goods to all stores. With the
changes in the trends they will always change their designs as well. This acts as
another way to increase their profits. Moreover, recognition for valuing quality
services and quality products to the customers attracted more people.
(Thompson.S.,2009)
45
WEAKNESS:
Primark is suffering losses through internal and external theft. Primark is
suffering more external theft when compared to the internal theft. If the company can
overcome these they can save a good amount of money from the stock loss. Penneys is
not offering sales assistant for each customers due to the immense amount of
customers. (White.T.,2009)
OPPORTUNITIES:
The increasing demand of online retail spending is a very good opportunities for
Primark. The growing global foot ware market is the next opportunities for
development. The global foot ware market is expected to continue growing by 3.7%
between 2005 and 2011. Recession, can be positive by giving good quality products at
low price. (Teather.D.,2009)
THREATS:
Primark don’t give expression and communication, as it does
not advertise, which is an advantage to the competitors. Primark don’t have an
advertising whilst but their competitors have. The competition in the market is another
threat facing by the company. Presently Primark is competing with other well
established companies like M&S, next, Zara, H&M etc. (Jennifer.J.,2010)
46
ANALYSIS AND INTERPRETATION:
47
(4) ANALYSIS AND INTERPRETATION:
In the whole research, the researcher is concentrating on the shrinkage in
the retail due to internal and external theft. From the research it is clear that House of
Fraser is suffering a great loss due to internal and external theft. Primark is only
suffering a small loss. Both of the companies have different aims but they have the
same common enemies for internal and external theft.
House of Fraser is a well-‐reputed company providing a vast
amount of branded products to the customers. They have adopted different loss
prevention tools like RFID, EAS, CCTV etc, but still now the company is suffering a great
loss due to internal and external theft. In the company the external loss is double when
compared to internal loss. The company has to take proper actions to control this.
CCTV is a major aid for controlling losses but it have often-‐limited value in detecting
crimes carried out by staff. A small percentage of staff working in retail is dishonest,
but it made around 24.4% internal loss to the company.
House of Fraser is revealing that, the major loss for the company is
occurred from women ware. From the overall loss, loss from women’s wear itself
accounts for 38.4% to 39.6%. In order to avoid the loss from the fitting room, the
customers are assisted by a sales advisor. Make the customers aware, that they are
being watched all the time. To avoid the theft from the fitting room, the fitting room is
kept tidy. Un-‐tagged stocks are not allowed to take to the fitting room. A maximum of
four items are only allowed to take to the fitting rooms.
The staff theft made house of Fraser a loss of 24.4%. The company has
adopted only very few methods to reduce internal loss. The security made random
checks in lockers and bags of the staff. The security, monitor the staff on floor, if there
is any doubt about the staff.
48
The above information is showing that House of Fraser has been more
aware about these losses. It made a loss of € 89,528 in 2009. If the company is more
aware they can save this money. One of the biggest faults in House of Fraser is the lack
of employee training. Even after the company is aware about the loses, the company is
not taking efficient steps to back up the technology they installed to avoid losses.
Primark is a well-‐established company providing a wide collection of
products at a reasonable price. This company is also suffering a great loss due to theft.
However, here, it is just the opposite of House of Fraser. Here the internal theft is very
low when compared to the external theft.
The security officials have reported that, they report a minimum of five external
thefts in Primark from each store. However in Primark, the company has to give more
importance to avoid external theft.
49
. SUGGESTIONS AND RECOMMENDATIONS:
50
(5) SUGGESTIONS:
House of Fraser has to give more importance to avoid both internal and
External theft and Primark has to give more importance to external theft.
(5.1.) IN ORDER TO AVOID INTERNAL THEFT
• Increased usage of video surveillance camera.
The studies are showing that the installation of video surveillance camera helps
to prevent employee theft. The employees must be well aware that they are
being monitored all the time. The installation of cameras in the storage room
and fake cameras has a positive effect on minimizing employee theft.
• Better hiring practices and applicant screening.
The job applicants must be carefully screened before hiring new
employees. A proper reference checks, which includes the professional checks
and police record checks. A proper reference check is very crucial for the staff
handling money.
• Salary raises/ open discussions
In certain cases the employees may be dissatisfied with the salary and
other issues. Then they have a feeling that the best way to revenge against the
company is to steal. Through an open discussion and workshops, the
employees can explain their problem. This will help the company to find
remedial measures to make them happy.
• Giving free products to the employees.
Giving products to the employees have a positive impact to reduce theft.
The “give away” or certain kind of perks acts as a reward for respectful behavior
of employees.
51
• Peer Reporting:
Peer reporting is another method to recognize the person who is stealing.
However, the company has to be very careful in this. The company does not take
any actions with out any solid evidence.
• Better control system and record keeping:
A proper control of the inventory through regular weekly or monthly stock
taking will limits the employee theft. It is quite easy to understand the losses
happening. Presently companies are doing stocktaking in 6 months or one year.
A proper control through weekly or monthly stock taking will reduce the loss.
(5.2) IN ORDER TO AVOID THE EXTERNAL THEFT:
• Giving the employees proper training:
All employees have given proper training for loss prevention and placing the
cases behind the cash register. The training given to the staff is considered as
the most effective approach to loss prevention. This has to be closely
accompanied by technology. Therefore, the company has to give more
importance to training and technology. Giving proper training to the staff is
the most cost effective way to reduce shrinkage.
• Hiring and keeping the staff honest:
Employees have direct contact with the customers and the stock.
So, hiring and keeping the honest staff is one of the best way to reduce
shrinkage. Through proper training they will be well aware about the different
procedures inside the company. They can better know how the loss is
happening and how can it be reduced. They know the products that are very
prone for stealing and the places that need more care.
• Placing the most prone area to video surveillance
The security officials and the staff have been very keen
about the places in the shops, which is very prone to theft. For e.g.: products,
which are kept very near to the entrance of the shops. By placing video
surveillances in these areas will help to minimize the loss.
52
(5.3) RECOMMENDED BEST PRACTICES FOR HOUSE OF FRASER AND PRIMARK:
House of Fraser and Primark are two different companies working in retail
sector. These two companies are following different loss prevention methods.
House of Fraser have already adopted the new technology loss prevention
methods like EAS tagging, RFID etc. but Primark is not following that. House of
Fraser has to adopt new methods to reduce losses from women’s ware and the
losses made by staff. Primark has to give importance to external loss. Therefore,
the author is trying to suggest different best practices for two companies. The
following best practices are supporting the present methods adopted by both the
company and it is also considering the company’s present strategy
HOUSE OF FRASER
PRIMARK
1.Loss prevention training for the staff
2. Disk control system
3. Store detectives
4.proper security tagging on all merchandises
products.
5. Peer reporting
6. Fake cameras in storerooms.
7. Free products and samples for staff
1.loss prevention training for the staff
2. Disk control system
3. Fake cameras in stock rooms
4. Implementing ceiling mirrors
53
(5.4) REASON FOR CHOICE OF THE ABOVE METHODS:
All these methods are the best one which has been used to reduce shrinkage in
retail. Even after the implementation of different technologies the companies are suffering
losses. The companies have to adopt new methods to reduce employee theft. Employees
are the main aspects, which can reduce retail shrinkage.
The author chose two different strategies for two companies. Primark is a
company, which is providing good quality products at a reasonable price. On the other
hand, House of Fraser is providing all the branded products in the market. The adoption of
new technologies like RFID, EAS tag is not suggested for Primark, because it will affect their
business strategy. It makes the products more expensive. House of Fraser has already
adopted these technologies in all stores.
House of Fraser and Primark are not targeting their staff. Through proper training to
the staff, they can back up their present loss prevention methods. The above research is
also suggesting the importance of staff training to avoid internal and external loss. The
studies done on this field is proving that staff training is the best method to avoid internal
and external loss.
Both the companies have adopted the disk control system but it is not working efficiently.
In House of Fraser they are reporting the major loss from fitting room. Therefore, they have
to give more importance to this.
House of Fraser does not have the store detectives or shadow security, but
Primark is following it. The store detectives are working as a good loss prevention tool in
Primark to avoid external theft. House of Fraser can adopt this method to avoid external loss
to a certain extend. The personal experience from the job is showing that, in House of Fraser
some merchandise products are not properly tagged. The staff has been more aware about
this.
54
Both, the companies are not considering fake cameras as a tool to avoid theft. The
above studies are showing that the presence of fake cameras are avoiding staff theft to an
extend. Implementing more ceiling mirrors is useful in Primark. The secondary research is
showing that mirrors in the store can act as a loss prevention tool. The adoption of fake
cameras and ceiling mirrors is considered as a cheap loss prevention tool.
House of Fraser doesn’t give free gifts and products to their staff. The studies are showing
that giving free gifts and products to the staff can reduce the staff theft.
In addition to the above method, hiring and keeping them honest staff will glorify the effort.
From the researcher’s personal opinion, instead of introducing new methods, giving proper
training to the staff will be more effective.
(5.5) CONCLUSION:
The whole research is revealing that, the internal and external theft is making a
huge loss to the companies. House of Fraser is suffering huge loss when compared to
Primark. It is derived from the study that, the best method to reduce internal and external
theft is staff training. House of Fraser and Primark are not giving proper training to the
employees. The additional methods can act as a supportive loss prevention tool. The
adoption of this method can save money and can increase the efficiency of the company.
55
. APPENDIX
56
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