Interesting to see that BOSS (the British Oil Security Syndicate) has launched a ’forecourt crime index’ to help retailers gauge their own experience against a national benchmark. It’s a good idea, and one not to be dismissed, however, the real limitation is that the index appears to relate specifically to drive-offs and NMoP (no means of payment) incidents as if they were the only elements of forecourt crime. Some with long experience in the industry might beg to differ. That’s not to suggest that these two problems are insignificant. Assuming that the estimated £30m-a-year cost of these incidents is accurate, that works out at an average of around £3,500 per site nationally.
Specific experience in forecourt retail however, suggests that other criminal activities on forecourts may be costing the industry as a whole rather more. These don’t make headlines for various reasons: they’re low level in the sense that they’re continuous in small individual quantities making them hard to detect. And, of course, they affect particular types of retailer (ie dealer owner-operators and commission operators) more than others. When a commission-operated site suffers a drive-off or NMoP incident the cost usually ends up being borne by the corporate site owner.
When the same site loses shop stock or cash, the loss comes out of the com-op’s own pocket. As the industry has moved away from direct-managed and owner-operated sites towards huge networks of commission-operated sites, fuel-related losses continue to be news even if they’re just the tip of the iceberg. The stock and cash losses that have always occurred at site level remain the individual operator’s problem and don’t make news or show up in any index.
In accounting terms, stock losses and cash losses are generally seen as two sides of the same coin. One can be turned into, or hidden by, the other either deliberately or by poor record keeping. This sort of theft is low level because without rigorous accounting and stock control it can be extremely difficult to spot in the short term. If a gang breaks into a site and steals 8,000 cigarettes (for the sake, of simplicity let’s assume they cost £8 a pack), the loss of £3,200 is obvious and makes both local news and some form of crime statistic. But, if a site loses a single pack of the same cigarettes every day of the year, the cost of £2,920 may only appear in the annual accounts, but it’s just as real as if someone had broken in and stolen them all in one go.
The problem of identifying losses
Shop theft has always existed. Talk to a few retailers and they’ll tell you of watching CCTV recordings of ’customers’ walking out with stuff and they’re the ones who’ve actually noticed the stock gone. When it comes to missing cans of soft drinks, confectionery or even tobacco, those thefts only come to light when reviewing accounts if there are any, of course. Identifying stock losses shouldn’t be a problem.
On-site technology should make it easy to spot issues at the touch of a button. Unfortunately, in the real world, many retailers lack the time or knowledge to use sophisticated POS/BOS set-ups properly. As a result retailers are frequently misled by wrong figures when they do try to investigate suspicions: a stock management system giving wrong information is worse than not having one at all. If a retailer doesn’t use the IT correctly, or uses the alternative of shift-based manual stock reconciliation, the fallback method of identifying theft would be regular management accounting to spot margin shortfalls by sales group. Of course that still relies on having performed physical stock-checking to give meaningful figures. Sadly, many retailers don’t have the time or training to use POS/BOS stock control systems properly; the same applies to undertaking manual stock monitoring.
As for management accounts many com-ops look at their annual accounting allowance and find it barely covers the cost of preparing a single set of accounts, let alone any sort of regular management accounts; so they trade for a year at a time without realising how much stock they may be losing.
Look at those figures again: annual average losses of drive-offs/NMoPs around £3,500 per site; losing a single pack of cigs each day around £3k per site. Add in losses of other stock and the likelihood is that the real cost of crime on the forecourt is much higher than anything simply based on stolen fuel.