Canadian Retailer - Holiday 2015 - 29

OVERLOOKED LOSSES
What types of losses can grocers often overlook? A 2015 report from global insurance firm Lockton highlighted
several specific risks for grocers:
1. Reputational harm, like
damage to the brand
resulting from anything
from food safety concerns, to compliance with
regulations, to security
and privacy breaches.

2. Regulatory shutdown,
which can be an issue
as major grocery chains
increasingly rely on
independent, third-party
certifiers to ensure product safety.

3. Supply chain risk,
related to natural or
man-made events that
could disrupt the flow
of products and hinder
a grocer's ability to
function effectively.

4. Direct and contingent
network risk, such as
network disruption that
impairs a grocer's system or any third-party
systems it depends on to
conduct business.

"Grocery retailers face major operational risks which aren't covered by a traditional insurance program," the Lockton
report stated. That makes it especially vital for the sector to conduct thorough risk management reviews and explore tailored insurance solutions.

list that many grocery stores stock: shampoos, razor blades, back here for sale, with the powder weakened."
batteries and vitamins.
Some grocers have other objects of criminal deThe Global Retail Theft Barometer also notes the specific sire. At Nature's Emporium, a health food grocer
high-risk items in the grocery category: cheese, fresh meat, con- with two locations just north of Toronto, a quarfections, cooked meat, fish/seafood, baby formula, and spices.
ter of the space is devoted to supplements. That's
Many items that are top targets for theft in other retail set- a target: "We carry a large selection, and they're
tings-like handbags, clothing, electronic goods, smartphones, relatively expensive, very small and easy to steal,"
gaming devices (and games), watches and jewellery-are pro- says John Charleson, vice president, information
tected by security tags, chained up, or kept under lock and key. technology at the small independent chain.
That's not the case for almost everything on
"The big difference in the grocery sector is the margin.
display in a grocery store.
Ronald Clarke, a Rutgers criminology profes- In fashion, you can have some pretty significant
sor, coined the term CRAVED to describe mermarkups. In grocery, when you lose something it
chandise that's susceptible to theft. Grocers
have an abundance that fit a CRAVED model: really does hurt. Our margins are very thin."
concealable, removable, available, valuable, en- WAYNE KOZAK, Sobeys
joyable and disposable.
Any retailer wants to avoid losses, but the ones in grocery Staff interventions trump technology
can hit especially hard. "The big difference in the grocery secCharleson is intrigued by some newer LP
tor is the margin," says Wayne Kozak, director of security at solutions using technology. In one, a camera is
Sobeys Ontario. "In fashion, you can have some pretty signifi- mounted at floor level at the cash. It takes a piccant markups. In grocery, when you lose something it really ture of the bottom of the cart, and flashes a mesdoes hurt. Our margins are very thin."
sage on the cashier's screen if something is in
there. That can prevent the common ploy of payWhat criminals crave
ing for what's inside the cart while walking off
It's easy to see why grocery items are craved, considering with merchandise that's tucked on the bottom.
the high demand for certain commodities. "You'll see a lot of
When he visited a P&G facility, Charleson took
organized retail crime, where people come in with virtual shop- note of new ways to merchandise that trigger
ping lists for cheeses and meats," says Kozak.
some sort of action when a person takes a product
These goods can then be re-sold to restaurants. Tarasoff off the shelf. For example, with a display of razors,
spoke to someone who made his living that way. Restaurants a light could flash or a noise could sound when a
gave him their orders, and paid maybe 40 per cent of the whole- package is removed. Just enough, says Charleson,
sale price. "This guy would laugh that their specials would "so people feel they're being watched."
often revolve around what he would steal," says Tarasoff.
Another line of defense is the cash. "From a
Kozak, who started his career as a police officer before spend- store layout point of view, we have a tight front
ing the last 29 years in the grocery business, notes that baby end," says Charleson. "There's the cash all the
formula is a target for other reasons.
way across, as opposed to a wide open aisle to"In the drug world, it's probably the number one mixer of co- wards the door. You have to squeeze through a
caine or heroin," says Kozak. "People will also sell it on the Inter- cash line, so traffic is impeded by lanes or disnet, or they'll ship it overseas where it's rebranded and shipped plays. That narrows the gap."
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