In July, thieves bashed in the window at Dirt Cheap Cigarettes in Henderson, Kentucky, grabbed 64 cartons of cigarettes and ran. In June, a shopper at Whitetail Crossing convenience store in Baraboo, Wisconsin, slipped two cartons under his shirt and slipped out the door. That same month, an outlet store owner who does not wish to be named discovered that two employees were stashing cigarette cartons in garbage pails behind the store and picking them up after hours. Earlier in the year, more than 700 cartons were taken from an outlet store located in the Seneca Nation reservation in New York State during an armed robbery.
Shocking to the average consumers, these incidents of shoplifting, robberies, and employee theft barely merit a reaction from veteran tobacco outlet owners. “It happens,” shrugs Mike Gripp, owner of Muscatine, Iowa-based The Cigarette Outlets. “In 10 years, we’ve had two armed robberies and multiple after-hours break-ins.”
Cigarettes have long been an attractive target for thieves, due in part to their being a relatively high-value small product. But state and federal tax increases over the past decade have contributed to the theft issue, notes Andy Kerstein, owner of Sea Bright, N.J.-based Smoker’s Haven, who points out that manufacturer price hikes and government taxes have created a teeming black market for cigarettes. “Over the past five years, the taxes and price increases have virtually doubled the value of cigarettes,” he says. “And any time a product becomes more expensive, you have more inventory theft and break-ins and a much larger black market.”
But while theft overall appears to be on the rise, cigarette shoplifting is less prevalent—a change outlet owners attribute to the rise of non-selfservice cigarette stores. “We have a lot less pilfering than we did five years ago,” says Kerstein, who also serves as president of the National Association of Tobacco Outlets (NATO) “I believe that’s because so many stores have switched to a non-self-service format. It’s very hard to pocket merchandise that you can’t touch.”
While the switch to non-self-service was spurred by manufacturer incentives rather than theft prevention motives, there are other moves retailers can make to deter thieves. Point-of-sale inventory and security systems are both effective in minimizing theft. By enabling storeowners to keep tabs on cartons, POS systems with scanning capability make it more difficult for employees to pilfer and for cashiers to ring up lower prices for an accomplice—two of the more common methods of employee theft.
“We check inventory in our stores every morning and employees report their shortages,” reports Gripp, who also believes that a well-staffed store is effective in deterring thieves. “Our philosophy is to always have two people in the store, one running the register and one walking customers to the racks and assisting them with their purchases. The benefit is twofold—the customer gets good service and the greeter employee is able to keep an eye out.”
A good security system that alerts authorities when glass is broken or a door bashed in is critical to preventing smash-and-grab, after-hours thefts or to minimize the losses from such an incident. Both Gripp and Kerstein urge retailers to invest in a good security system and to place cameras and monitors of what they’re recording in prominent places in the store. At Smoker’s Haven, the first thing a customer sees walking in the door is “himself on a monitor,” says Kerstein, who sees an alarm system and camera security as the most essential step a retailer can take to preventing theft. “That’s a huge deterrent.”
Employee theft can be trickier to spot and to prevent, partly because employees have greater access to merchandise and an insider’s knowledge of stores’ security measures. In fact, according to a National Retail Security Survey, employee theft is estimated to be responsible for 48 percent of store inventory shrinkage. But vetting the backgrounds of prospective hires, close monitoring of employee actions, and established store procedures can help reduce internal theft.
Gripp relies primarily on his store managers, each of whom have seven-plus years experience, to be alert to employees’ attempts to steal. But The Cigarette Outlet also does a background check at federal, state, and local levels to screen prospective employees.
Camera security can also help to deter employee theft, particularly when employees are well aware that they are being recorded and that someone is watching the recordings. Kerstein makes a point of watching security tapes of new employees and pulling them aside to comment on something he saw on tape. “I’ll compliment them by saying something like, ‘I saw on last night’s tape how well you handled that customer,’” he explains. “It gives them feedback and also lets them know that someone is watching. Are you going to completely stop theft? No, but you will reduce it to the point that it won’t have a dramatic impact on your bottom line.” •
Seven Steps to Stopping Thieves
1. Install an enhanced security monitoring system that incorporates video cameras.
2. Check inventory frequently—daily, if possible—and maintain a log.
3. Use a scanning system to manage store inventory and minimize stock.
4. Keep stockrooms or warehouses locked and monitored by video security.
5. Establish procedures to handle incoming inventory immediately.
6. Keep exterior and interior lights on at night.
7. Consider stamping all cigarette cartons with a store stamp or other unique marking so that stolen items are more difficult to resell. •