Retailers Challenged by Racial Profiling Issues

Barneys and Macy's have brought to the forefront of the American consciousness the issue of racial profiling by retailers relative to shrink, and, in the process, have placed a challenge before all retailers: How can it be prevented in loss prevention activities?

The story begins quietly enough with the purchase of an expensive designer belt by an African-American man at Barneys in New York City in April. On completion of the transaction, store officials allegedly notified police detectives who were in the store and two plainclothes detectives stopped the shopper in the street and detained him for several hours until the debit card payment was found to be valid. Some months later, the man sued Barneys and the NYPD for racial profiling, and press coverage of the incident prompted similar lawsuits, one of which was directed at Macy's.

Barneys' initial response was to conduct an internal study, which claimed that the police acted on their own; the NYPD answered that the detectives acted on information supplied by store associates. The chain also denied any racial profiling by its staff. In any event, African-American leaders were outraged, an inquiry by New York's attorney general ensued, and days of bad press in the local tabloids arrived for Barneys and Macy's. Negative coverage even included an exposé of Macy's "Room 140" in which accused shoplifters supposedly have been interrogated and subjected to duress to admit guilt.

Earlier in December, the retailers created, in cooperation with New York's African-American community, a Customers' Bill of Rights to be posted in store. This document commits retailers to treating shoppers with respect whatever race or gender, prohibits unreasonable searches, and recommends enhanced sensitivity training for store associates.

As a backdrop to these developments, retailers have long experienced high levels of shrink and feel vulnerable in an open display/self-service environment. The NRF places total shrink of all types at 1.8 percent. But retailers generally operate on narrow margins. Macy's for example has a net-to-sales ratio of less than 5 percent. Due to this, retailers tend to be extremely sensitive to all forms of shrink and go to great lengths to prevent it. Indeed, prior to the April confrontation, Barneys brought in a new security team and instituted new, more aggressive anti-theft tactics in store, a move that apparently opened the door to this incident.

• Student Sues Store, NYPD - CNN
• Barneys' Study Clears Barneys of Racial Profiling - New York Post
• Profiling Complaints by Black Shoppers Followed Changes to Stores' Security Policies - New York Times
• Racial Profiling Claims Exposes Stores' Tactics - Newsday
• Customers' Bill of Rights - Retail Council of New York State