Retail Security Options and Costs - The Definitive Guide for New Zealand Retailers

Crime is at an all-time high - our guide outlines Retail Security options and costs, covering essential insights into hiring security guards, understanding their roles and legal implications, and balancing security needs with costs.

Retail Security - The Definitive Guide for New Zealand Retailers

Updated 20 July 2024

Summary

With the increasing cost of living putting pressure on many New Zealand households, there are significantly more headlines of Ram Raids and theft in city centres, estimated to cost $1 billion each year to retailers and those working in the hospitality industry each year.
As such, many New Zealanders will notice significantly more security around malls and shops. For example, seeing additional "muscle" with vests on outside jewellery stores on Queen Street in Auckland or other fashion stores is becoming increasingly popular in response to ram raids.
Many small businesses will be considering whether they need to take similar actions.

Our guide explains what you need to know if you're a retailer considering hiring retail security. We cover:

Know This First: What is Shrinkage (Theft) and Why is it on the Rise?

For retailers and small business owners, managing security is crucial to business operations, particularly in the retail and hospitality sectors. If you run a physical shop (like a dairy or a food establishment), there's always the risk that you lose inventory due to theft.

Shrinkage in the retail industry refers to the loss of inventory due to theft, employee fraud, administrative errors, or supplier fraud. Theft, a significant contributor to shrinkage, includes shoplifting by customers and employee theft. Most retailers expect a small amount of shrinkage every year.

Reasons for the recent rise in shrinkage include:

Increased opportunity to steal due to higher foot traffic in retail stores (particularly post-COVID when everyone's heading back into shops).
Sophisticated methods of theft and fraud (such as multiple parties entering the store, where one distracts the employees and the other steals the merchandise).
Economic hardships (such as inflation and cost of living) lead to desperate measures.
Inadequate security measures exist in some retail environments (either due to cutting staffing costs or the lack of security guards).

What do Retail Security Guards do?

While most Kiwis probably assume retail security guards are able to chase down and arrest people who steal, their real responsibilities are completely different to public perception. Retail security guards have a multifaceted role that goes beyond just preventing theft. Often, they will not have the power to arrest citizens (except in very specific circumstances) but are usually tasked by businesses with a few responsibilities:

Monitoring: They monitor the premises, looking for suspicious behaviour or potential threats. If they spot something suspicious, they can either raise this issue with the manager on duty or call the police if a situation breaks out.
Enforcing Policies: Ensuring that store policies, such as those regarding returns or entry into certain areas, are followed.
Crowd Control: Managing the flow of customers, especially during peak times or special events, to ensure a safe shopping environment and to prevent any injuries that may occur on the premises.
First Aid and Emergency Response: Many security guards are trained in first aid and will be acting as first responders in medical emergencies or situations requiring immediate attention (such as if a customer faints or has a heart attack on the premises).

Why Do New Zealand Businesses Hire Retail Security Guards?

There are a few reasons why you’d want to hire security guards:

Deterrence of Theft and Crime
A visible security presence often acts as a deterrent to potential shoplifters and other criminals. For instance, if you were planning on robbing a store, but there were many security guards outside, you might think twice before trying to steal anything (or you might pick another store with less security).
Safety and Assurance
Security guards can enhance the feeling of safety for both customers and staff, particularly in those industries where theft is more common or customers make regular trips there (like jewellery stores, dairies or supermarkets).
Emergency Response
If theft occurs in a store, it's almost always too late to do anything about it (as calling 111 and getting a police response takes a significant amount of time, depending on when they arrive). Security guards are usually trained to respond to emergencies, ensuring swift and appropriate actions. While security guards may not legally be able to arrest anyone, they can provide the presence and knowledge to react to certain situations should they arise.

What are the Most Common Types of Businesses That Need Retail Security Guards?

While any business can hire security guards to protect and support their physical stores, security guards are significantly more popular in certain industries, such as:

High-End Retail Stores: Jewellery, electronics, and luxury goods stores (like Michael Hill) are prime targets for theft due to the high-value goods they stock. As such, these stores are the most likely to have security guards present (both inside and outside the store).
Supermarkets and Large Retail Outlets: Due to their significant size and high foot traffic, supermarkets are much more common as a theft target due to the thief's ability to steal things while everyone is preoccupied. It's common to see security guards after check-out counters at supermarkets to prevent grab-and-runs. Examples include Countdown, New World and PaknSave.
Hospitality Venues (particularly where alcohol is present): Hotels, restaurants, and bars are also areas where security guards may be needed - particularly where the security of guests is paramount. These places can get particularly busy and noisy, providing opportunities for distraction and periods for thieves to enter and exit.
Shopping Centers: Complexes with multiple retail units are also among the most popular areas requiring comprehensive security measures.
Pharmacies: Due to the nature of what pharmacies stock, thieves are common in places like Chemist Warehouse or other pharmacies (both for lifting prescription drugs and other high-value supplements and products generally).

What are the Different Types of Security Guard Options?

There are three main types of security guards:

Private Security Firms
Private security firms will offer services that provide trained guards to walk and monitor on-premises stores on a contract basis. These services can range widely from unarmed guards to specialised retail security personnel. Often, their guards will not have any additional authority that normal citizens have to chase or continue pursuing a suspect (e.g. there's no legal "citizen's arrest" unless they fit specific criteria) but may be better placed to support proactive prevention of theft (through conducting bag checks, monitoring aisles and monitoring CCTV cameras.
In-House Security Teams
Instead of outsourcing the hiring of security guards to an external firm, some companies hire their security teams in-house (e.g. The Warehouse may have its security teams at each branch). Usually, this is a common practice for larger retail businesses with specific needs, but there are no restrictions on who can hire security teams.
Temporary Security Services
Rather than hiring a private security team full-time, some security services offer periodic or temporary patrols or checks. Temporary security services are useful for one-off or annual events (such as a music festival) or during peak retail seasons (like Easter or Christmas).

What are the Pros and Cons of Hiring Retail Security Guards?

Pros:
There are a few reasons why businesses might hire retail security guards:

Enhanced Theft Deterrence: More guards on-site means a greater visual deterrent to potential thieves, reducing the likelihood of shoplifting and other criminal activities.
Improved Safety: Increased security presence can make customers and employees feel safer, which is especially important in high-risk areas or during busy shopping.
Better Crowd Management: Additional guards can effectively manage large crowds, particularly during sales, special events, or holidays, ensuring order and safety.
Quicker Response to Incidents: With more guards available, the response time to any security incident, whether it's a theft, a medical emergency, or a customer dispute, is significantly reduced.
Comprehensive Surveillance: The bigger the retail store, the easier it is for theft to occur on-premises (as fewer people can watch each aisle). More guards allow for broader and more thorough monitoring of the premises, leaving fewer blind spots and ensuring better overall surveillance.
Enhanced Customer Service: Security guards often double as customer service representatives, providing directions, information, or assistance to shoppers, which can enhance the overall customer experience.

Cons:
Even though it can be useful to have additional retail security guards, there are some drawbacks:

Increased Costs: The most significant drawback is the increased cost. This includes their salaries and potentially higher insurance premiums, uniform costs, and training expenses. New Zealand businesses need to determine if the potential cost of training and hiring an in-house security guard (likely around $55,000 to $75,000 a year) outweighs the potential value of stolen items. For many businesses, the theft that occurs each year is so small that the cost of hiring a full-time security guard isn't worth it. However, having said that some stores (like jewellery stores) make sense (given one thief could easily steal thousands of dollars worth of rings or necklaces).
Potential Intimidation of Customers: An excessive security presence can sometimes make customers feel uncomfortable or under suspicion, which might deter them from shopping.
Diminishing Returns: There's a point at which adding more security personnel may not proportionately reduce theft or improve safety, leading to unnecessary expenses without significant benefits. For example, one security guard outside is great, but ten outside might not make any difference.
Management Complexity: More staff means more complex scheduling, supervision, and management, which can be a burden, especially for smaller retail operations.
Space and Logistics: In smaller retail environments, additional security staff might crowd the space, potentially disrupting the shopping experience.
Liability Issues: More guards can mean a higher liability risk, especially if a guard oversteps their authority or mishandles a situation.

Retail Security Providers

While MoneyHub isn't able to provide reviews for each security guard provider below given the niche sector focus, this is a list of common security guard providers (depending on location):

Red Badge

Most of the providers above have tiered pricing depending on the size of the force the retail business requires, the level of protection and the duration of security.e suggest contacting the companies above if you’re a small business owner thinking of hiring additional security.

What Powers, Legal Rights and Limitations are Placed on Security Guards?

The section below references guidance from Community Law:

Do retail stores have the authority to inspect a customer’s belongings?

Retail employees do not possess the legal authority to inspect a person’s bag, regardless of any displayed signage stating otherwise in the store. Customers are within their rights to decline a bag search. Should store personnel forcibly search a bag, they could be liable for criminal assault charges and potentially a civil claim.

Retail establishments, however, are permitted to require customers to leave their bags outside before entering. They also have the right to ask customers to exit the premises. Even when store staff or security guards legally detain someone suspected of shoplifting (a "citizen's arrest"), they are still not authorised to search for the person or their bag.

Under what circumstances can a store prevent someone from leaving on suspicion of shoplifting?

Stores typically cannot detain anyone unless under specific conditions:

High-value items: Suspected theft of items valued over $1,000.
Nighttime hours: Between 9:00 pm and 6:00 am, such as in a 24-hour convenience store.

Know This:

Store personnel must have "reasonable and probable grounds" for their suspicions; mere conjecture is insufficient. In these scenarios, a "citizen’s arrest" may be conducted using reasonable force, but this still does not grant the right to search the individual or their possessions.
If none of these conditions apply, a person can leave while the store requests they stay. A Retailer can contact the police if they wish.
Unlawful detention by store staff or security, such as confinement in a room, could result in charges of criminal assault.

Can a retail store impose a fee or fine in addition to the cost of the stolen items?

Some stores issue "civil recovery notices" to alleged shoplifters, demanding a fixed fee within a specified timeframe, such as $275 within 21 days. The legal enforceability of these notices is questionable, and you can refuse payment.

Legal responsibility for payment arises only if the store substantiates its civil claim against you in the Disputes Tribunal or District Court, proving specific losses caused by you, rather than applying a generic fee to all shoplifters. Should the store validate its claim and obtain a favourable ruling, it may employ legal means to enforce payment, including property seizure warrants.

Is it legal for a retail store to issue a trespass notice to prevent someone's entry?

As a retail store is private property, owners or managers can deny entry or request departure from the premises, provided anti-discrimination laws are not violated. Remaining in the store after being asked to leave constitutes criminal trespass.

Know This:

Stores can issue a verbal warning to refrain from re-entering if they believe a person may return. Entering the store within two years post-warning is a criminal offence. This action is commonly referred to as being "trespassed."
Court-issued trespass warnings following a conviction also carry a two-year restriction. Violations of trespass laws can result in fines of up to $1,000 or a three-month imprisonment.
Re-entering a store after a trespass warning and committing shoplifting can lead to burglary charges, as the person's legal right to enter differs from the general public.

Must-Know Facts about Retail Security Guards

1. Make sure you know what retail security guards are legally allowed to do

Retailers must be aware of the legal framework governing security practices. This includes understanding the rights of customers and employees and the legal limits of what security guards can do. Ethical considerations, such as respecting the privacy and dignity of individuals, are also paramount. For instance, some organisations have been criticised for security guards implementing policies regarding what customers can and can’t do or wear. As a business owner, ensure you know what you can legally ask your customers to do.

2. A significant number of retailers are now adopting technology solutions to prevent crime

Many retailers now use multiple methods to prevent crime, such as combining security personnel with technology such as CCTV surveillance for enhanced security. Additionally, new startups are utilising Artificial Intelligence to assist in identifying potential intruders, such as New Zealand-based Retail Crime Intelligence & Loss Prevention Platform Auror. More retailers are increasingly adopting these cost-effective technology solutions and (or sometimes in place of) security guards to reduce theft.

3. Retail Security Guards as Part of a Broader Loss Prevention Strategy

Retail security guards are most effective when part of a broader loss prevention strategy. This strategy can include staff training, inventory management systems, and customer service protocols. A well-rounded approach deters theft and helps identify internal shrinkage due to employee theft or procedural errors.

4. The Importance of Customer Experience in Retail Security

The presence of security guards should enhance, not detract from, the customer experience. Guards need to strike a balance between vigilance and approachability. Overly aggressive or intrusive security measures can create an unwelcoming atmosphere, potentially driving customers away.

Costs of Hiring Retail Security

Retailers have several options, each with unique cost implications. Our breakdown explains more:

1. Private Security Firms

Retailers often turn to private security firms for trained guards. These firms offer various services, from unarmed guards to specialised retail security personnel.
Cost Range: The cost depends on factors like the level of training, whether the guards are armed or unarmed, and the duration of the contract. Generally, retailers can expect to pay anywhere from $28 to $40 per hour for a standard unarmed security guard. The rates can be higher for more specialised or armed guards.

2. In-House Security Teams

Larger retailers may hire their security teams directly. This involves costs associated with recruitment, training, salaries, and benefits.
Annual Salary Range: An in-house security guard's salary can range from $55,000 to $75,000, depending on experience and specific duties. This does not include additional costs like training, uniforms, and insurance.

3. Temporary Security Services

For events or peak season shopping, temporary security might be a more cost-effective option.
Event-Based Cost: Temporary security services can vary greatly in cost, depending on the duration and the number of guards needed. Retailers might pay several hundred to a few thousand dollars for a single event or a short period.

Additional Costs to Consider:

Training and Equipment: Whether hiring in-house or through a firm, additional costs for training and equipment can apply. This might include first aid training, communication devices, and uniforms.
Insurance and Liability: Employing security personnel can affect a retailer's insurance premiums. It's important to factor in potential increases in liability insurance.
Balancing Cost and Need: Retailers need to balance the cost of security with their specific needs. High-risk or high-value retail environments, like jewellery stores or high-end electronics stores, may find the investment more justifiable than a small boutique with less expensive merchandise.

More details: