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Show Rooming: An internal thief’s online store thanks to you!

Posted on 5/3/12 9:30 AM

It is the bane of retailers nationwide; shoppers walking into stores across the nation armed with a smart phone. They enjoy the comfort and design of your showroom, they handle your merchandise, ask  your staff questions about it – if it is clothing you're selling, maybe they try it on – maybe they even buy it just to try it out knowing they can take advantage of your liberal return policy. But the game plan from the beginning has been to qualify the purchase and then go online and shop for a better price.

The time and effort put into a successful brick & mortar is undercut before your customer walks into your new store – because searching the entire globe for a better price with expedited shipping is just too easy.

But this article is not about the challenges of retailing in today’s high tech marketplace. This is about a group of people who use your stores for showrooms then sell the very same merchandise on-line for cheaper than you’re selling it. The real ‘poke in the eye’ is you are paying them to do it – they are your employees.

The typical scenario comes to your attention when someone in your company was browsingNew with Tag images resized 600 their favorite on-line auction site and by chance views a seller’s online store that is featuring both your branded merchandise and the newest fashions that just hit the stores this week. Take a closer look – not just at the merchandise, but look into the background of the picture and you might be surprised to find that the merchandise is being displayed in your store. It might be on the very racks displayed according to your store plan – or sitting on a hook next to the emergency door exit of your back room. That merchandise will sit in your store until the bid is made and won.  So not only is this industrious worker you hired using the modern technique of Show Rooming – they are also using ‘just in time delivery’ – from your store to their customer’s door.

I am Sammy ‘sticky fingers’, it is 6pm and I am working in the mall and on until closing. I have just learned my manager has to go home a couple hours early leaving me in the store to close alone. At 7pm my manager leaves the store and I put my ‘business hat’ on. I take one dozen quick pictures using my smart phone and get them all posted online by 7:30pm. By 8:30 I have over 25 ‘views’ of the merchandise from my auction site and I have already sold 1 of the 12 pieces. By 9pm I am closing the front door and I now have over 40 ‘views’, 4 items have sold and I have 6 questions on sizing that I have to answer before I close out the registers…my customers are demanding.  If all goes well and I can get the right answers to these people it looks like I could end-up selling half of the 12 pieces of merchandise before I go out for drinks with my  friends – I love flash sales! I will make a quick stop to my 24/7 postal depot to pack up the merchandise I will walk out of the store with.  My customer’s products will arrive at their doorstep within 3 business days and I will end-up with raving reviews because my customers received their brand new authentic merchandise and it was delivered just as advertised – because I am that good!

The internet and the smart phone have not created the problem, of course stealing and embezzlement have been around long before the ‘internet’ phone or any phone existed. But the ease at which an employee can snap a picture and post it – or send it to be posted - makes the term embezzlement almost laughable. It is more like taking candy from a baby. 

What to do? There are manuals written on how develop effective LP programs and there are more options than ever to put an effective program in place quickly. However, no matter what program you have currently you need to designate someone to search your product on a regular basis. Know your best sellers and most popular items and start looking for them online. It is out there and you will find it. Look at the pictures closely and if necessary make purchases.  Often the type and tagging of the merchandise can give you clues to its origin.  Don’t be surprised when the source of the item is your own employee because there is nobody out there with better access to your merchandise than the people you hire to run your business.

Written by John Fice, CFI

COO of LP Innovations, Inc.

Topics: policies and procedures, Loss Prevention program and development