Submitted by Randy Guarneri
District Asset Protection Manager


All companies have Shrink Budgets, and we all know the factors that go into those budgets: shrink history, item movement, square footage, sales volume for the last 2 to 3 years, new competition openings, competition closings, etc.

Loss Prevention Departments are measured in some form or fashion by the percentages reflected by the shrink budgets. Here is my proposal: Look at data developed by criminologists Robert Figlio and Steven Aurand, and incorporate this data into our yearly Shrink Budgets.

Now you might be asking yourself these questions: "Who are Figlio and Aurand, and what exactly did they develop that could benefit our company?"

These individuals developed none other than the CAP Index (Crimes Against Persons/Property). This Index is composed of demographic variables such as housing data, population, economic data, educational information, etc. Do these factors sound familiar? They should.

This is the same sort of information which is used when interviewing a suspected dishonest associate and when looking at his/her personnel file to develop our rationalizations when dealing with these issues. Furthermore, we may even seek answers from store managers such as these: "What part of town do they live in?" "How much do they make?" "Are they in school? " "Are they a single parent?" and "How many children do they have?"

Let me give you a perfect example of why CAP Indexes would be useful in Shrink Budgets. Why would a posh store in Ponte Vedra, Florida, with a CAP Index of a minuscule 16 have the same exact Shrink Budget as a store in Atlanta, Georgia, doing the same sales volume with a CAP Index of 584? Would it surprise you that there was a 2.89% difference in shrink between the two stores? You can guess which one had the higher shrink!

In this sputtering economy, theft has increased for both the occasional and professional criminal. If companies were to use criminologists Figlio and Aurand's data model and incorporate it into existing known data that is currently used to make shrink budgets, it could help predict new losses that are on the horizon and help develop realistic budgets. I would also argue that this process could assist in hiring a better quality of employee, help decrease the number of Worker's Compensation Claims, help determine which locations need security guards and/or police officers, and truly compare stores realistically with regards to shrinkage.

It could be a total win-win sweep for Loss Prevention and Operations!
 

Randy Guarneri has over fourteen years experience in loss prevention management. Guarneri has held various positions in loss prevention and asset protection, including store, district, and regional positions. Guarneri has a Bachelor of Science Degree in Sociology with a Minor in Criminal Justice from College of Charleston. He is a member of the Alabama Retail Association, Southeast Loss Prevention Network, Food Marketing Institute (FMI) for Asset Protection and a member of the Local Chapter of Loss Prevention/Law Enforcement Division of Birmingham.

Guarneri can be reached at randyguarneri@hotmail.com or (843) 224-4961.