Theft remains a challenge for East African retailers

Kenyan retailers are taking a variety of measures to guard against theft.

Although supermarkets have made strides to combat theft, it continues to be a headache.

Photographs of ‘human CCTVs’ watching over shoppers and potential shoplifters have been doing rounds on Kenyan social media recently. The pictures of people in a supermarket, perched on six-foot metal stools at the end of each row has ignited much laughter, but it depicts one retailer’s frustrations in the battle against shoplifting.

Despite having installed CCTV cameras, the owner of the supermarket, located in central Kenya, told local media he still needs two people guarding each row to spot shoplifters, particularly during peak hours.

In 2013, the Retail Trade Association of Kenya (Retrak) claimed major retailers were losing up to Ksh.3.5bn (about $34m) every year through theft.

Police quickly disputed the huge figure, but there is consensus retailers are losing money, and lots of it, to thieves. There have been several reported cases of organised shoplifters caught in the act. And in an interview earlier this year, Dan Githua, then CEO of supermarket chain Tuskys, admitted shoplifting has become “extremely difficult”.

“We get someone who has stolen a Kiwi shoe polish worth Ksh.40 ($0.39). Now what do you do with that guy? You take him to the police and they release him. We have hundreds of people shoplifting every day. It is organised gangs,” said Githua.

In East Africa most supermarkets are family-owned, some of which started from humble beginnings and have grown to have a significant regional presence. Harold Richter, managing director of loss prevention company Hipora Business Solutions EA, says most supermarkets initially focused on sales and growth – with little attention on managing theft. Hence, the exact losses they’ve made are unknown.

“Retailers haven’t really measured their losses from day one until now. But I can assure you that as an industry, the losses are running into billions,” says Richter.

Hipora works with several supermarkets in the region, including Carrefour, Nakumatt and Tuskys. It offers them services in loss control management, theft and fraud investigations, and staff recruitment.

“Every business is losing money, so they are all looking for ways to reduce shrinkage,” says John Wanjohi, co-founder of Hipora. Wanjohi previously worked as a senior manager at South African retailer Shoprite before starting Hipora seven years ago.

Shoplifting often comes to mind first when talking about retail theft, but Wanjohi says it accounts for a “very small percentage” of total losses. In fact, more damage is caused by collusion between employees and third parties. Last year Tuskys suspended a number of employees for suspicion of working with an external cartel to illegally clear goods from one of its stores.

Wanjohi adds some managers will order more goods than what their branch needs in exchange for kickbacks from suppliers.

“It could be that a supplier wanted to get rid of goods that were almost expiring or goods that are damaged so they talk to the manager. Some suppliers also collude with staff to deliver just a portion of the goods the retailers are paying for,” he explains.

“At the point of sale you can have a friend or family member that works as a cashier, you go to their till and they could deliberately not ring all the items you are purchasing – or they under-ring by using a different barcode,” says Richter. “Customers also entice supermarket employees. They will go to an employee and say they only have $200 and they want to get the refrigerator worth $600 and they will convince the employee to help them. Or they will buy a fridge and hide a TV inside the fridge.”

Situation slowly improving

Although newly-constructed shopping malls are far better equipped in terms of security, many of the old buildings some supermarkets operate from are not conducive for secure retailing.

“Another problem is multi-level stores. Here you find three to four stories, which makes it a complex environment to try and manage from a security point of view. Your operating expenses are far greater because you need more security gadgets,” notes Richter.

In recent years Richter says retailers have made some “remarkable improvements” to manage losses.

“They are equipping themselves with far better technology. They are automating processes right from receiving goods, to invoicing, all the way to the point of sale.

“But there are still improvements needed. One of the biggest hurdles they have is having to teach employees how to use and apply new technologies.”