Giant Food Inc. is waging electronic warfare against its oldest enemy, the shoplifter, using a tiny weapon that seems to stop aisle thieves cold.
Besides giving the supermarket the satisfaction of crying, "Gotcha," the little gadget helps Giant regain 50 cents of every dollar that it loses to shoplifting and other forms of theft.
"We couldn't be happier over the results," says Barry Scher, a spokesman for the 132-unit chain.
"Until now, there was very little we could do to stop shoplifters. But this system has reduced shoplifting better than 90 percent."
Giant and other supermarkets around the country have always fought a losing battle against shoplifters, and suffered substantially on the bottom line. A store manager could easily find half his profits walking out the doors with thieves.
Giant believes it has reason to celebrate its new weapon against a perennial foe because it expects to be able to go about the task of squeezing slim profits out of a very tough market without worrying about customers stealing merchandise.
"In the stores where the system is installed, the profits have improved a half a percent ," says Scher. That's gigantic, considering that the entire chain reported only 1 percent profit on sales of $1.6 billion last year.
Although supermarkets can boast they are the world's largest retailers, with yearly sales surpassing $221 billion, the business has a low profit margin--anywhere from below 1 percent to 3 percent of sales, according to the Food Marketing Institute, a trade group. Thieves take about $24 billion a year, the institute says.
Vigorous competition for shoppers eats away store profits; daily sales, other price reductions and cents-off couponing mean supermarkets must rely on high volumes to realize any significant earnings.
Against those odds, the growing problems of shoplifting and internal theft--"shrinkage," as they are referred to in the industry--have become painful to supermarket executives.
"Shrinkage has always been a very serious problem," says Scher. "It's worse now because inflation is shrinking paychecks, too. You name it, they'll take it. Even honest people are stealing now."
While it advances down the road to improved profits, Giant understandably wants to keep the mechanics of its anti-theft weapon a secret.
But essentially, it works like the airport security scanners that detect bombs, guns and other metal objects on boarding passengers.
At Giant stores, the war on shoplifters starts with a store manager going up and down the aisles using a hand-held "gun" to make electronic impressions on merchandise--anything from steaks to children's socks.
If a shopper sneaks the marked goods into a pocket or bag and attempts to pass a scanner mounted on the counter without paying, a loud bell sounds.
"A clerk then asks politely, 'Excuse me, is there something you forgot to put on the checkout counter?'
"Nine times out of 10, a customer will quickly put the item on the counter and say, 'Oh, sorry, I forgot I had that in my bag . . . ' "
So that shoppers are warned there is something better than the human eye watching for a sneaky sleight-of-hand, large posters announce that an electronic detective will catch any and all shoplifters.
Brochures giving some--but not all--the details on the system are stacked on counters for customers. They explain that the detection system "will not harm or even bother honest shoppers."
The handbill stresses that the system is "harmless and safe for people, foods and nonfoods."
"Watches, magnetic tapes, cameras, hearing aids, heart pacemakers and other electronic devices will neither alarm the system nor be affected by it," the handbill notes.
Scher adds: "People will always try to figure a way to beat any kind of system. But magnets or anything like that won't fool this system. And it doesn't use X-rays, so aluminum or lead foil won't work either."
Giant installed the system in one of its Baltimore stores as a test in March 1979. It worked so well in the theft-plagued store, Scher said, that it was expanded into four other "trouble stores" in the Washington and Baltimore area.
The cost of the system is easy enough for Giant to take because Scher says "it seems to be paying for itself."
The developer of the system, Checkpoint Systems Inc. of Thorofare, N.J., said the cost of setting up the anti-theft system is modest.
"For the 105 supermarkets we've equipped, it amounts to only one-quarter of 1 percent" of a store's annual sales, says Peter Stern, chairman and founder of the firm.
The 11-year-old company, which has put its device in 5,000 retail outlets and libraries, reported sales of $10 million last year and a profit of $1 million, a margin much better than the supermarkets in the Eastern U.S. and Western Europe that it armed with the theft-buster gear.
However, the battle against disappearing stocks is only half over. The penny that Giant earns from each dollar of merchandise it handles can be easily wiped out by employe theft as well.
"There is inside theft, and outside theft, and it's about equally divided," Stern says. "Some store employes know all about the problems of shoplifting and blame missing merchandise on customers. But they take nearly as much as shoplifters.
"There are many ways to steal. One is 'undering,' where a cashier will ring up hamburger and let a friend or relative pass the checkout counter with sirloin steaks.
"Vendor cheating is another serious problem. He'll deliver 28 cases and charge the store for 38 cases," Stern said.
Scher admits that inside theft is also a problem in several Giant stores, either with cashiers who ring up $1 million annually on each counter or the suppliers who can slip in a false invoice amid the bustle and confusion of unloading truckloads of merchandise.
"The Checkpoint system can help us with this, too. If there is still a shrinkage problem, then it alerts the management that the problem is inside theft," Scher says.