Security outsourcing: Financial cost saving or operational necessity?

(07/12/2004)

Losses as a result of shoplifting and staff theft cost the retail industry billions of pounds each year. It has forced retailers to look at every available avenue to reduce the occurrence of crime, one of which is an increasing dependence upon manned security. However, increased regulation in the security sector from legislation such as the Private Security Industry Act will force many retailers to reconsider how their security function is managed.

The UK has the dubious distinction of the highest crime rate in Western Europe. Figures released by the British Retail Consortium reveal a retail crime is committed every 3.7 seconds in the UK. Recent research commissioned by Securicor Security emphasises the shrinkage problem faced by retailers. Almost one in five British adults admits to having shoplifted at some time in their life. This figure illustrates the scale of the problem facing retailers and the importance of employing experienced and skilled loss prevention officers.

The research also revealed that over three million people believe that shoplifting does not harm retailers. While this endemic belief that shoplifting is a ‘victimless crime’ persists, retailers will need to do everything they can to deter and prevent shoplifters. Until attitudes change it is incumbent on retailers to employ effective solutions to help reduce the problem of shrinkage.

From early 2005, the Security Industry Authority (SIA) will require all security officers in the UK to be licensed. Through the Private Security Industry Act, the SIA plans to help the security industry drive up standards and provide customers with better service and higher levels of screening and training. Each security officer will be responsible for obtaining their own licence and it will become a criminal offence to operate without one.

Although in-house security is not covered by licensing at present, it is almost inevitable that the cost of security provision for retailers operating with in-house teams will increase as a result of the new licensing regulations. It is anticipated that a number of employees in the private security industry will leave as a result of the new licensing regulations and stringent standards laid down by the SIA. This will have the effect of reducing the pool of labour available in the security industry.

The traditional economic supply and demand equation states that as supply reduces while demand increases, or remains constant, wage rates will inevitably increase. While it will not be mandatory for retailers to ensure all in-house staff are licensed, they will not be immune from the impact of regulation. It is anticipated that retailers will be forced to increase wages if they wish to retain staff, as the number of vacancies in the private security industry increases. Licensing may also have the effect of driving those who have been rejected for a licence by the SIA to look for positions in retailers’ in-house security teams. Retailers should therefore ensure that their application and screening procedures are absolutely watertight. Alternatively, retailers can look to outsource to a private security firm where they are assured that all manned guarding staff supplied will be licensed and trained to SIA standards.

By outsourcing security to a professional, private security firm, retailers will be able to circumvent the cost of licensing, thereby lowering the cost of security provision. Retailers will also be able to make better use of multi-skilled personnel and a range of solutions, as opposed to if the security is all operated in-house. Securicor’s retail research revealed that over four million people believe that retailers deserve to be victims of shoplifting because it is so easy to do. If retailers outsourced the security function to experienced and skilled third party organisations, this might change.

The benefits of outsourcing go beyond just cost efficiency. A third party supplier would ensure that all staff held valid licences and that they are provided with bespoke training packages for their designated role. Screening and vetting is conducted by experts who can also manage all subsequent human resources matters such as TUPE transfers, holiday cover, compliance with the Working Time Directive and reward packages based on Service Level Agreements. A professional security firm can absorb all ancillary and accessory costs associated with a security function which would otherwise fall on the retailer.

It is not just about having a visible security presence in the retail environment. It is important that guards are trained to look for suspicious activity and are trained in crisis management, which will enable them to handle difficult situations. Unless retailers outsource security training for in-house security teams it is unlikely that the retailer will be able to train them to the standards maintained by specialist security providers.

Retailers using a professional security firm benefit from technically advanced solutions, specialist consultancy and enhanced service delivery which they would not otherwise be able to offer in-house. Some of these services include remote patrols and monitoring, offender profiling, biometric capabilities and fully interfaced internet access to tracking and KPI data, shrinkage monitoring and automated incident reporting.

With predictions that the economy will slow over the next two years to a point where retail sales will start to decline, there will be increased pressure on budgets available to retailers for crime prevention measures. However, retailers must prepare for the impact of new legislation that will increase the cost of security provision so that retail crime can be contained and, where possible, reduced. Overall, by outsourcing security, retailers benefit from a more effective and cost efficient security function which reduces shrinkage and mitigates the risks associated with the retail sector.

Case study: A national retailer outsourced to Securicor Security

A major national retailer was employing a number of different suppliers for its security provision and was receiving an average of 79 per cent security cover at its stores. Within 12 months of appointing Securicor as the sole security supplier, the cover rate increased to 99.9 per cent. In addition to this, staff turnover had reduced and there was a significant reduction in shrinkage due to the use of integrated security solutions through both retail security officers and covert teams.

All stores are profiled and ranked, dependent on incidents observed and recorded and critical stores where violence is a problem are given the highest priority. In addition Securicor uses grading categories linked to arrest rates, stock losses and incidents recorded.

Working to several key performance indicators, store detectives reduce shrinkage by the deterrence of criminal activity and apprehension of the perpetrators. Additionally, in-store security personnel detect and deter fraud and refund abuse. Working closely with the store security team’s, store detectives actively support and monitor all shop floor policies and procedures relating to external theft.

Article contributed to Security Park by Douglas Greenwell, Marketing Director of Group 4 Securicor (UK Security).

Related topics:  Manned Security and Security Guard   Security Services 

Print version | Email to a friend | Related articles

Data breaches: Trends, costs and best practices gives you all the latest information on securing personal and corporate data, key recommendations for immediate action to improve data security, and how to respond to data breaches.

Other Security news and resources