(The content below was transcribed from an interview done with Acacia Law. We think you’ll find it much easier
and more enjoyable to read this way.)
Interviewer: You mentioned before, that if you go to multiple Target stores for instance, I know the casinos in Vegas will watch to see if someone comes into a lot of casinos and look for cheats, but do places like Target or Wal-Mart or Costco do the same thing? Do they watch and see if they see the same person appear in multiple stores and then say “Hmm, let’s look into this person, why are they doing this?”
Acacia Law: Absolutely. They have sort of a two tiered format for observation. First of all obviously they have video security so they are constantly monitoring who comes in and who comes out of the store. Obviously the security department recognizes people who are regulars. In conjunction with that, they have people who are on the floor, actually moving around. You’ll never know, because they look like just regular customers but they are observing everything around them. They act like shoppers, they are very good at it and they’re very hard to spot because this is what they are trained to do.
Interviewer: Amazing, really.
Acacia Law: They essentially are looking for suspicious activity on the floor and again they are appearing just as fellow customers so they don’t raise any alarm bells, and you got to remember that in most of these places they have mirrors set up so that they don’t have to be in the same row as you. They don’t have to be walking up the same aisle. They can be three aisles away and see what you are doing from a camera, or from a mirror. So, again you won’t notice them, but they’re watching you. Ordinarily if they think you are engaging in some sort of suspicious activity and so it’s a fairly sophisticated system. If you were to take a TenK report or an annual statement from a store such as Target or Wal-Mart, you would find anywhere from six to nine percent of their inventory is simply dissolved and off the books each year on account of what appears to be theft. That’s a fairly …
Interviewer: They call that “shrinkage” right?
Acacia Law: Yes, it’s a fairly substantial loss of inventory. Now you’ve got to understand a lot of these places don’t keep everything they have within the store. The stores are stocked from warehouses.
Interviewer: Right.
Acacia Law: So the thefts can take place in warehouses as well, but the reality of the situation is that because they lose so much of their inventory to theft, it’s cost effective to put these programs into place. Again, their purpose is not only to apprehend and recover the stolen goods, but it is as a deterrent. They essentially are sending out a message that ‘We will prosecute to the fullest in the criminal court and we’re not going to let you off the hook because you’ve been a regular customer. We don’t care how small the item is, we can’t make exceptions.’ We have shareholders to answer to.
Interviewer: I didn’t realize the thinking behind it but now I can see. If Target’s losing 7% a year of all their money due to theft, it’s a huge hit to them and to investors and they are not going to see the individual little guy who steals a candy bar, they are going to see the big 7% or 8% and be pissed about it and say “All right, that’s it, we’re going to cut down on you.”
Acacia Law: You are exactly right. That is what has been going on and in fact, again, it is a constantly evolving system. What I mean by that is that, like in the computer industry, which again is often fraught with forms of theft that I have to deal with, is always going to be a way to counter the system, and then the system upgrades in order to prevent that particular breach of their system from occurring again.
Interviewer: Right.
Acacia Law: So it’s like an evolving circumstance. I can tell you that.
Interviewer: Like an arms race. The good guys versus the bad guys, they each update their technology and tactics.
Acacia Law: Exactly, and you know the way technology has advanced over the past 20 years with respect to computers and again, everything being standardized and bar-codes and all kinds of items that they can implement, the odds are getting better and better in favor of the companies. But again, there is always loopholes somewhere, someone figures it out. Oftentimes it’s usually figured out by an employee on the inside. It’s not uncommon I have represented people who have participated in staged armed robberies.
Interviewer: Hmm.
Acacia Law: Basically because an employee who works there, noticed, for example that the back door was always open and that’s where they’re counting money. Have a friend come in with a gun and a mask on, they leave the back door unlocked for them, they come in, they rob the place, they leave. So that’s again, another aspect of theft that technically though becomes a robbery at that point, which is even more serious. To get back to this never ending cycle.
Interviewer: Okay.
Acacia Law: Yes, if you think about it and again, I’m just throwing out numbers here. Don’t hold me to the numbers, but as an example, if you’re a shareholder or a prospective investor and you read that currently, for example Wal-Mart has $30 billion worth of inventory on hand. Well, 7% or 8% of $30 billion okay, we’re talking a substantial amount of inventory, a substantial loss there. You are talking about, $3 billion of goods.
Interviewer: That’s a lot.
Acacia Law: Being shoplifted. As you said, and rightly so, they don’t look at it as a pack of cigarettes or a stick of chewing gum, they look at it as $3 billion going out the door and you are part of that.
Interviewer: If it goes to channel four and you forget for the moment that you are stealing anything.
Acacia Law: Exactly, exactly. So regardless of what you might look at it, this is how we have to look at because we have shareholders we have to answer to, and obviously any prospective investor wants to know what’s the shelf life of the inventory, and also what’s its rate of dissipation.
