GAINESVILLE, Fla.—As he returned from the National Retail Federation’s Executive Summit in Dallas, Richard Hollinger, the director of the National Retail Security Survey, was succinct in his evaluation of the current state of the loss prevention community: “The theme was exactly this: ‘Do less with less,’” he said. “Obviously retailers are tightening their belts and trying to save as much as possible. As it’s related to payroll, that’s their highest fixed cost so they’ve had reductions in their sales personnel and their LP budget and that really has had an effect on their abilities to stop some types of crimes.”

The National Retail Security Survey, which released its final report in early October, reported a sharp decline in budgets for security and loss prevention, at .34 percent of their firm’s 2007 annual sales, which was down significantly from .47 reported in 2007.

Hollinger said that in 2007 when the NRSS reported the lowest shrinkage levels, many LP directors approached him concerned that decreasing shrinkage rates would result in cuts to LP budgets, which would consequently lead to higher shrink rates. “I don’t think that any CEOs declared victory [over shrink] and made that decision to cut budgets,” he said. “I think decreases were due to the tightening of belts when the retail market crashed.”

Dan Doyle, senior vice president of human resources and loss prevention for Beall’s Department Store agreed that budget cuts were due largely to the general economy.

“I think that budgets put a lot of pressure on departments and LP is certainly not excluded,” Doyle said. “LP gets scrutinized pretty heavily, but I think a lot of companies are reluctant to cut overly aggressively because they’re worried shrink rates will pop back up after they’ve made so much improvement. I don’t know of any places that have cut over radically.”

But regardless of the reason, it’s evident budgets continue to decrease for LP departments, forcing directors to be more savvy with the money available to them. David Shugan, director of loss prevention for Carter's Inc., said his LP program is fairly young, only in its second year of development. “From an overall standpoint, I’ve been hearing more people talk about cuts, whether their head count is being reduced or travel reduced, but on the flipside we’re using different technology to overcome that,” he said. “We’re having to be very resourceful. If we’re going to lose, we’re going to find a way to win in the long run.”

In terms of the types of technology utilized by loss prevention departments, the numbers in the 2008 report were very similar to 2007. However, Hollinger said one of the big changes is the way that LP executives are utilizing these types of technology. “One of the big changes is the leveraging of technology,” he said. “Now that there are less boots on the floor, the only way to cover stores is to make better use of cameras and technology and that’s exactly what seems to be happening.”

However, while it remains the last item on the LP systems list, RFID merchandise tags is one of the newest technologies to be used to battle inventory shrinkage. Approximately 5.7 percent of retailers reported adopting the technology, which has grown significantly since it first appeared in the NRSS survey in 2002 at 1.7 percent. “In the last year or two the chip price has dramatically fallen and it’s become more of a possibility that every item above a certain price point could be tagged,” he said. “This technology can serve two purposes–ensuring items are stocked properly and making sure items are sold and not stolen.”

However, while the adoption of new technologies such as RFID continues to grow, it still pales in comparison to some of the most commonly used loss prevention tools such as burglar alarms, which are utilized by 92.4 percent of respondents, digital video recording systems at 90.5 percent and CCTV cameras at 86.7 percent. The consistency in these numbers is something that Hollinger said continues to amaze him. “The numbers don’t change dramatically from year-to-year and in many ways that’s a sign of a stable industry,” he said.