National Retail Security Survey Interactive Discussion

1. Robert Hanson, Professor
Northern Michigan University
Dan Faketty, VP Asset Protection & Safety
Southeastern Grocers
Thank you to our session sponsor!
National Retail Security Survey (NRSS)
An Interactive Discussion

2. 2
• 28th Consecutive year survey completed
• A total of 41 Questions
• 63 Retailers representing multiple companies, banners or brands
National Retail Security Survey (NRSS)
 Shrink
 Staffing and budgets
 L.P. Systems and Programs
 Internal, External, Vendor Theft
 Emerging threats (data security)

3. 3
63 Retailers, representing multiple brands and over $267B in retail sales.
Total Sales $267,852,180,000
National Retail Security Survey (NRSS)
FY 2018 Sales Volume
$99 million or less 7%
$100 million to $499 million 14%
$500 million to $999 million 23%
$1 billion to $2.49 billion 19%
$2.5 billion to $4.9 billion 11%
$5 billion to $9.9 billion 14%
$10 billion to $24.9 billion 7%
$25 billion or more 5%

4. Overall Inventory Shrink as a Percentage of Sales
4
What was your company’s inventory shrinkage percentage calculated at retail?
FY 2018 FY 2017 FY 2016 FY 2015 FY 2014
Average Inventory Shrink
as a % to sales
1.38% 1.33% 1.44% 1.38% 1.38%
3% and higher shrink 10.9% 9.1% 9.0% 5.4% 6.6%
Between 2% and 2.99% 14.5% 10.9% 14.1% 13.5% 10.5%
Between 1.5% and 1.99% 10.9% 12.7% 17.9% 5.4% 13.2%
Between 1.25% and 1.49% 10.9% 9.1% 9.0% 17.6% 15.8%
Between 1% and 1.24% 3.6% 16.4% 7.7% 17.6% 19.7%
Between .50% and .99% 21.8% 20.0% 24.4% 25.7% 18.4%
.49% and below 27.3% 21.8% 17.9% 14.9% 15.80%
Shrink remains flat over 5
years
Companies with higher
shrink in 2014 continue to
get worse
Best performing companies
continue to get better

5. 5
Over the past year, your company’s
shrink has…
Poll Question #1
A.Increased
B.Decreased
C.Stayed the same

6. 6

7. 7
Shrink - Knowledge Gap
• Identifying the causes of shrink in our top tier stores
• Combating internal theft through mobile P.O.S. Fraud
• Combating external theft through P.O.S Fraud
• Understanding the technology criminals use
New threats and emerging reasons of concerns

8. 27%
12%
11%
3%
24%
9%
7%
2%
26%
9%
8%
3%
25%
9%
7%
2%
23%
10%
8%
3%
Women Latinx African-American Asian-Pacific
NRSS 2019 NRSS 2018 NRSS 2017 NRSS 2016 NRSS 2015
LP Management (or Higher-Ranked Roles) – Representation
by Demographic Groups
8
What is the percentage of the following groups in positions of LP manager and above?
(averages)

9. Top Loss Prevention Awareness Programs Used by Retailers
9
Response
NRSS
2019
NRSS
2018
NRSS
2017
NRSS
2016
NRSS
2015
Anonymous telephone “hotline” 85.7% 81.0% 90.5% 93.8% 94.6%
Discussion during new hire orientation 82.5% 74.6% 81.0% 83.1% 90.5%
Bulletin board notices and posters 81.0% 81.0% 81.0% 92.3% 87.8%
Code of conduct 79.4% 79.4% 88.9% 90.8% 90.5%
Active Shooter training program 65.1% 54.0% 63.5% 61.5% 66.2%
Internet, web -based communications 58.7% NA 50.8% 55.4% 55.4%
Anonymous online / email notification
system
57.1% 42.9% 52.4% 60.0% 55.4%
Honesty incentives (e.g. cash & gifts) 31.8% 33.3% 36.5% 56.9% 54.1%
Anonymous
hotlines
remain
strong yet
incentives
for reporting
dishonesty
continue to
fall
Awareness as part of new
hire orientation is down
Code of Conduct
trending down

10. 10
• Training employees to resolve conflict
• Add more L.P. Professionals
• Enhance employee awareness and training on conflict resolution
“Escalated customer service issues are rising, including violence”
Loss Prevention awareness, programs and staffing
Respondent Concerns

11. 11
Over the past year, acts of violence in
my company’s stores have…
Poll Question #2
A.Increased
B.Decreased
C.Stayed the same

12. 12

13. Top 5 Loss Prevention Systems in Use
13
NRSS
2019
% Point
Difference From
NRSS 2018
% Point
Difference From
NRSS 2015
Burglar alarms 92.1% + 4.8 - 7.9
Digital video recorders 84.1% + 9.5 - 9.1
Armored car deposit pickups 68.3% - 6.4 - 22.2
POS data mining 65.1% + 7.9 - 4.8
Live customer visible CCTV 61.9% + 7.9 - 13.4

14. Biggest Movement from NRSS 2019 Compared with
NRSS 2018 for Loss Prevention Systems
14
What’s In: NRSS 2019
% Point Difference
From NRSS 2018
Merchandise alarms/electronic security tags 46.0% 25.4
Acousto-magnetic, electronic security tags 34.9% 12.7
Check approval database screening systems 55.6% 11.1
Digital video recorders 84.1% 9.5
What’s Out: NRSS 2019
% Point Difference
From NRSS 2018
Remote IP CCTV monitoring 57.1% -19.1
Theft deterrent devices (spider wraps, keepers, etc.) 23.8% -17.5
IP analytics 22.2% -9.5

15. 15
Currently, our I.T. Department allows
CCTV to be placed on
our company network for remote video
monitoring.
Poll Question #3
A.Strongly Agree
B.Somewhat Agree
C.Somewhat Disagree
D.Strongly Disagree

16. 16

17. 17
Installation of remote IP CCTV
monitoring in my company is…
Poll Question #4
A. Increasing
B. Decreasing
C. Remaining the same
D. No future plans to install

18. 18

19. 19
Our IT Department allows for alarm
systems on the company network
Poll Question #5
A. Strongly Agree
B. Somewhat Agree
C. Somewhat Disagree
D. Strongly Disagree

20. 20

21. Actions Taken Against Dishonest Employees
21
FY 2018 FY 2017 FY 2016 FY 2015 FY 2014
Apprehensions (average) 322.6 506.1 345.6 865.3 834.0
Terminations (average) 335.0 397.8 333.2 552.7 651.6
Prosecutions (average) 91.3 104.4 93.3 158.3 209.6
Civil demands (average) 159.8 125.1 114.5 344.5 344.5
How many dishonest employee apprehensions, terminations, prosecutions and civil demands were made?
Apprehensions
continue to decline,
dramatically. Down
61% since FY 2014.
In FY 2018
Prosecutions
occurred in only 28%
of apprehensions

22. 22.2% 11.1% 3.7%
9.3%
7.4%
24.1%
16.7%
5.6%
Up to $249
Between $250 and $399
Between $400 and $499
Between $500 and $749
Between $750 and $999
Between $1,000 and $1,999
Between $2,000 and $4,999
$5,000 and above
Average=$1,264
FY Year Average
FY 2018 $1,264
FY 2017 $1,203
FY 2016 $1,923
FY 2015 $1,234
Average Loss per Dishonest Employee Case (FY 2018)
22
Flat
over
the
past
4
years

23. 23
Criminal prosecution is low in employee
dishonesty cases because of…
Poll Question #6
A. The amount of time testifying in court
B. The risk of losing in court and subsequent liability
C. Lack of evidence to prosecute
D. All of the above
E. None of the above

24. 24

25. 25
Dishonest employee apprehensions have
declined over the past 4 years because of…
Poll Question #7
A. Better loss prevention controls
B. Better loss prevention systems
C. Reduction of store loss prevention personnel
D. All of the above
E. None of the above

26. 26

27. Actions Taken in Shoplifting Incidents
509
370 370
1105
728
544
1441
742
309
3323
1935
2201
3455
2739
1216
Apprehensions Prosecutions Civil demands
FY 2018 FY 2017 FY 2016 FY 2015 FY 2014
27
How many shoplifting apprehensions (i.e. stops), prosecutions, and civil demands were made?
(averages)
% of Prosecutions
to Apprehensions
FY 2018 72.7%
FY 2017 65.9%
FY 2016 51.5%
FY 2015 58.2%
FY 2014 79.3%

28. 9.8%
17.1%
7.3%
2.4%
17.1%
17.1%
7.3%
7.3%
14.6%
Up to $49
$50 to $99
$100 to $124
$125 to $149
$150 to $199
$200 to $299
$300 to $499
$500 to $999
$1000 and over
Average=$546.67
Average Dollar Loss per Shoplifting Incident (FY 2018)
28
FY Year Average
FY 2018 $546.67
FY 2017 $543.28
FY 2016 $798.48
FY 2015 $376.80

29. 29
The #1 reason shoplifting apprehensions
have dropped is because of…
Poll Question #8
A. Safety concerns
B. Reduction in store Loss Prevention (floor walker)
positions
C. Liability Concerns (false arrest, false imprisonment, etc.)
D. Lack of return on investment
E. All of the above
F. None of the above

30. 30

31. Average=$2,885.15
Average Dollar Loss per Robbery (FY 2018)
31
FY Year Average
FY 2018 $2,885
FY 2017 $4,237
FY 2016 $5,310
FY 2015 $8,170
Average loss has declined by
65% since FY 2015
41.5%
11.3%
9.4%
11.3%
9.4%
7.5%
9.4%
Up to $199 $200 to $499
$500 to $999 $1000 to $1999
$2000 to $4999 $5000 to $9999
$10000 and over

32. 32
The reason loss per robbery incident has
dropped 65% since 2015 is because…
Poll Question #9
A. More customers using debit/credit
B. There are better controls to secure cash
C. There is less robbery
D. All of the above
E. None of the above

33. 33

34. Adoption of Sophisticated Technology
For threat prevention purposes, has your company implemented any of the following LP-
related emerging technology countermeasures?
(% who have already or plan to implement in next few years)
34
88%
56%
22%
19%
11% 10%
POS Analytics Solution Provider Video Analytics Fingerprint ID Facial Recognition
NRSS 2019 NRSS 2018

35. Merging of Loss Prevention and Cyber
How often are you involved in your organization's cybersecurity issues?
16%
14%
30%
30%
10%
Always
Very often
Sometimes
Rarely
Never
35

36. Merging of Loss Prevention and Cyber
There is increasing overlap between LP and cybersecurity priorities.
89%
11%
Agree Disagree
36

37. Merging of Loss Prevention and Cyber Continued
In what specific areas are you working with your cybersecurity colleagues?
60%
58%
53% 53%
44%
40%
26%
5%
Incident response Awareness / training Risk mgt. and
compliance
Investigation /
forensics
Disaster Recovery
and BPC
Personnel security /
insider risks
Threat analysis Other
37

38. Merging of Loss Prevention and Cyber Continued
Do you feel you’re as involved as you should be?
28.6%
25.4% 33.3%
12.7%
Yes, definitely
Yes, somewhat
No, not really
No, definitely not
38

39. 39
In my organization, clear direction (ownership) on the
protection of data and personal information in stores
between IT Security and/or Loss Prevention has not been
clearly defined
Poll Question #10
A. Strongly Agree
B. Somewhat Agree
C. Somewhat Disagree
D. Strongly disagree

40. 40

41. 41
In my organization, the relationship
between LP and IT security is…
Poll Question #11
A. Excellent
B. Good
C. Needs some improvement
D. Have no relationship

42. 42

43. 43
Response NRSS 2019 NRSS 2018 NRSS 2017 NRSS 2016 NRSS 2015
Increasing significantly (20% or MORE over
2018)
4.8% 3.2% 4.8% 12.3% 1.4%
Increasing somewhat (1% to LESS than 20%)
over 2018
39.7% 33.3% 30.2% 30.8% 38.0%
Remaining flat 31.8% 42.9% 33.3% 24.6% 36.6%
Decreasing somewhat (1 to 20% LESS than
2018 levels)
19.1% 12.7% 23.8% 30.8% 22.5%
Decreasing significantly (Over 20% LESS than
2018 levels)
4.8% 7.9% 7.9% 1.5% 1.4%
Loss Prevention staffing and Budgets
Compared with last year, is your LP budget in 2019 increasing, decreasing or remaining the same?

44. 44
All
500 or
fewer
stores
More than
500
stores
Yes, technology resources 56% 57% 55%
Yes, other budget resources 35% 43% 27%
Yes, staff resources 29% 20% 36%
No 32% 33% 30%
Loss Prevention Staffing and Budgets
Is your company allocating additional resources to address risks this year?

45. 45
All
500 or
fewer
stores
More than
500
stores
Analytical 61.9% 63.3% 60.6%
Cybersecurity 39.7% 43.3% 36.4%
Investigative 34.9% 43.3% 27.3%
Computer skills 33.3% 36.7% 30.3%
Leadership 28.6% 16.7% 39.4%
Emotional intelligence 28.6% 23.3% 33.3%
Interviewing 15.9% 16.7% 15.2%
Other (please specify) 4.8% 6.7% 3.0%
Employee skill sets needed for LP department success
What skills do you believe you need more of in your loss prevention department for your
programs to be successful or grow?

46. 46
I believe the NRSS survey is valuable and I
support having it continued
Poll Question #12
A. Strongly Agree
B. Somewhat Agree
C. Somewhat Disagree
D. Strongly Disagree

47. 47

48. To download a copy of this report:
• Create a MyNRF account on NRF.com
• Once logged in, use the search tool and input “NRSS”
• You can also visit:nrf.com/resources/retail-library/national-
retail-security-survey-2019
48