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MARKET FOCUS powered by A look at trends affecting the largest verticals security serves By Joel Griffin, editor, SecurityInfoWatch.com Retail: Shrink Cost Retailers More Than $112B in 2012 According to the findings of a new study released today, losses from shrink, which include shoplifting, employee fraud, organized retail crime (ORC), and administrative errors, cost retailers more than $112 billion last year, representing 1.4 percent of retail sales on average. The 2012-2013 Global Retail Theft Barometer, which was conducted by Euromonitor International and underwritten by an independent grant from loss prevention solutions provider Checkpoint Systems, is based on interviews and surveys of 157 companies in 16 countries. These companies generated more than $1.5 trillion in sales last year. Among the countries researched, Japan (1 percent of retail sales), Australia (1.1), Hong Kong (1.1 percent), and Germany (1.1 percent) had the lowest rates of shrink, while Brazil (1.6 percent), Mexico (1.6 percent) and Argentina (1.5 percent) were among the highest recorded. The U.S. was also near the top of the list, as the study found that shrink rates across the nation accounted for 1.5 percent of retail sales. Every country included in the study with the exception of the UK (stable), Germany (declining) and Hong Kong (stable) saw an increase in shrink in 2012. "Retailers continue to fight; they do everything right, they have the right products, they have the right quantities at the right time on the store shelf and then they get hurt with products being stolen and then they lose sales to good customers. It's all about on-shelf availability for them now," said Dan Reynolds, vice president at Checkpoint Systems. Shoplifting made up the majority of losses due to shrink in every country studied, while employee theft accounted for the second highest percentage of losses. In the U.S., however, losses from shoplifting (34 percent) and employee theft (32 percent) were nearly the same. Earlier this year, the 25th Annual Retail Theft Survey released by Jack L. Hayes International found internal employee theft to be a growing problem for retailers across the U.S. According to the survey, 71,095 dishonest employees were apprehended in 2012, which was up 5.5 percent from 2011. Retailers recovered over $50 million from these employees, which was also more than in 2011. The data shows that one out of every 40 employees stole from their retail employer in 2012, and on average, dishonest employees steal approximately 5.5 times the amount of retail goods than true shoplifters. "You have a lot of turnover at some of the retailers. We found that when you don't have that turnover and you have a good manager in the store, the shrink falls," Reynolds explained. "But, when you have higher turnover, it is harder to instill the disciplines and focus on store shrink." ❚ For more information go to http://www.globalretailtheftbarometer.com/. Healthcare: Obamacare to impact physical security at hospitals Most of the headlines surrounding the roll out of the Affordable Care Act have focused on the government's inability to solve a myriad of technical problems with the recently launched online health insurance marketplace, Healthcare. gov. However, experts say that Obamacare could also have a substantial impact on physical security at hospitals and other healthcare facilities when the law goes into full effect beginning next year. Due to provisions within the law that relate to reimbursement for Medicare and Medicaid, Ben Scaglione, director of healthcare security services for G4S and a member at large on the board of the International Association for Healthcare Security and Safety (IAHSS), says that hospitals are being forced to make tough spending decisions regarding support services which include security. "What healthcare is starting to see right now is a loss in Medicare and Medicaid funding. What Obamacare has setup 16 is that hospitals get a basic set of reimbursement or a basic number of dollars and then to get more of those dollars, it is based on (the hospital's) clinical data and patient satisfaction data. They have to meet certain national guidelines that are going to be changing over the next couple of years in order to get that higher level of reimbursement," Scaglione explains. "Of course, whenever they lay off people and they want to make extra money they cut security because they think, 'oh, well look at all this money over here, we'll just cut that out and life will be wonderful,'" says Caroline Hamilton, president of Fort Lauderdale, Fla.-based security consulting firm Risk and Security, LLC. As a result, many hospitals are trimming internal security personnel from their payroll and outsourcing the job to contract guard services providers. ❚ To see an expanded version of this article, go to http://www.securityinfowatch.com/article/11200812 SECURITY TECHNOLOGY EXECUTIVE • November/December 2013 www.SecurityInfoWatch.com