Shoplifting Solutions You May Not See

May 6, 2002 -- A small sign in the dressing room of J. Crew store in New York City reads in lowercase letters, "our garments have new security sensors. better. smaller. in fact you may not have noticed."

It's not just the warning sign that is unobtrusive. Hardly noticeable is a two inch long, rectangular white fabric tag sewn into the seam of some of the retailers' clothes. That unassuming tag is a new type of security device that will set off alarms if you try to stash that pair of chino shorts into your bag without paying for them.

It's also the latest tool that apparel retailers are using to thwart the scourge of shoplifting.

Shoplifting cost retailers more than $10 billion in 2001 and is the second most important source of inventory shortage retailers face after employee theft, according to the most recent National Retail Security Survey from the University of Florida. The recent arrest of actress Winona Ryder for allegedly shoplifting items at Saks Fifth Avenue highlights the widespread nature of the problem. Not surprisingly, retailers have tried a variety of ways to combat the problem, including surveillance cameras and security personnel patrolling the stores to thwart would-be shoplifters.

Now many clothing and accessory retailers are trying a new approach to make their product more difficult for thieves to steal — instead of merely attaching the bulky plastic tags now commonly used, they are putting security devices directly into the product itself, either in the form of a tags or by actually building the detector into the item.

Called source tagging, this method has been used extensively for the past few years by manufacturers of so-called hard goods like CDs or electronics. Now the world of soft goods, like specialty clothing retailers, are adopting the process.

"In the soft goods arena it is relatively new. We're we're seeing more and more … adopting this program in the last six to nine months," says Lee Pernice, retail marketing manager with ADT Security Systems, the Boca Raton, Fla.-based security solutions company whose Sensormatic Electronics unit makes the security tags for J. Crew and other retailers.

The Hidden Solution

The way the devices work is fairly simple. A security device, usually a pliable object which can be as small as a tiny paper clip, is placed in a product or a tag. It is then de-activated by the sales clerk once the item is purchased. If somebody tries to take the item out of the store without paying for it, the system will set off an alarm at the exit of the store.

"It can be hidden in the shoulder pad of a blouse, of a pocket of a jacket or in the laminates of shoes," says Dave Shoemaker, group vice president of strategic marketing for Checkpoint Systems, a Thorofare, N.J.-based security company that makes source tags for retailers like Kohl's and Urban Outfitters. "[The consumer] is not aware that these circuits are embedded deeply in the packaging or the products themselves."

The advantages of having a security device built into a product are many. The products come direct from the manufacturer already tagged and ready to go on the sales floor, eliminating the need for store clerks to manually put security devices on clothes or accessories, and also decreasing the risk that some items would get missed in the process.

The other benefit is that the security devices are difficult to find or remove. Cutting the tag is always a possibility, but security experts say the risk of damaging the goods in the process might deter some shoplifters, especially if they want to resell the items they've stolen. Some security devices, such as ones that are built into the core of a shoe, are virtually impossible for shoplifters to detect or deactivate.

So far, source tagging has been successful in reducing shoplifting by the hard goods industry, say security experts. The shrinkage rate of recorded music and videos, that is the rate of disappearance because of theft, is currently around 1.13 percent. That's below the industry average of 1.8 percent, according to the National Retail Security Survey.

Before that industry implemented source tagging in the mid-90s, the rate was as high as three or four percent, says Richard Hollinger, associate professor of sociology and criminology at the University of Florida in Gainesville and director of the National Retail Security Survey.

"Shrinkage rates for music and video used to be some of the highest for the entire study. Now they're below average," says Hollinger. "It's really a rather remarkable change."

Potential Pitfalls

So why hasn't the apparel industry jumped on the bandwagon sooner?

Industry experts say the new technology requires retailers to revamp their current security systems, an expense some have been reluctant to upgrade. ADT's Pernice notes that the ability to cover the wide exits of many retailers with this technology has only been available for about a year or so, further inhibiting widespread adoption of the technology.

Hollinger says that some retailers may be reluctant to use the new source tagging for public relations reasons. If a sales clerk doesn't properly de-activate a security tag, for example, a customer might walk around a shopping mall setting off alarms all day.

He also notes that some manufacturers put multiple security devices, sometimes by different manufacturers, in single products for extra coverage. Hollinger once found a source tag made by Sensormatic and one made by Checkpoint in the same package of a CD player. If one of the devices was deactivated, the other could still be active and would go off in other stores, he explains.

"Everybody is still a little afraid," says Hollinger. "While it makes good shoplifting sense, it doesn't yet make a lot of public relations sense."

Industry insiders say they're ironing out issues such as multiple devices in products so that such glitches don't become a problem. The Source Tagging Council, an industry group comprised of security companies, product manufacturers and retailers involved in source tagging are currently trying to avoid repetitive tagging.

But whatever technology retailers ultimately decide to adopt, one thing is for sure. The industry is going to continue to develop ways to confound even the most persistent shoplifter.

"The mixed bag of tricks seems to be a favorite these days," says Stephanie Brush, soft goods trade manger for ADT's Sensormatic unit. "You can have a hard tag on a more expensive item, but there may be a plastic attachment that may be integrated into the price ticket. The idea is to keep the bad guys guessing."