Building a ROI for Store Detectives…
For most retailers, the budget process for 2012 has already begun. As with most years, the question continues to be asked as to whether a ROI can be developed for store detectives. At an estimated cost of $35,000.00 per year, per detective is a retailer getting a return for that outlay? In addition to payroll costs are worker’s compensation and litigation costs.
The industry standard is one shoplifter every 13 hours with an average case value of 35.00 per apprehension. That puts a yearly recovery, per detective at $5,500.00. Hmmm, spend 35K to recover 5.5K ???
The correct method to evaluate ROI is to measure costs not on the actual amount recovered but, the true value of each case to that company. It is reported that a shoplifter steals 44 times before they are apprehended. If you catch a shoplifter in the middle of this number, you are preventing future thefts, assuming they stop or at least move to another chain. The value of future thefts must be calculated into the recovery amount. One company uses a “flat” number of $1,000.00 for each case, others will drill the numbers down based on average case value etc. When you factor in “future” dollars recovered, your LP Detectives can pay for themselves.
What about civil recovery dollars?
Often I hear the statement that having store detectives that apprehend shoplifters should pay for themselves in merchandise recoveries and civil recovery dollars. For some stores, low average price points equates to smaller case values and civil recovery dollars can go up and down based on many factors. If you apprehend someone for shoplifting and they are transient, the odds of a demand letter getting to them is almost zero. With all of that said, any dollars recovered will off-set the costs to some degree.
Can a retailer be the only one on the block not catching shoplifters?
The “street” knows who catches shoplifters and who does not. Being the only retailer in the mall or strip center that does not catch shoplifters is widely know and subject to theft focus.
Enjoy the week,
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