Behind the Increased Shoplifting & Dishonest Employee Numbers

In our 24th Annual Retail Theft Survey we reported on over 1,000,000 apprehensions (both shoplifting and dishonest employee) taking place in just 24 large U.S. retail companies representing 18,518 stores with combined 2011 annual sales in excess of $585 billion. These 24 retail companies lost over $6 billion to shoplifting and employee theft in 2011.

Both the number of shoplifters and dishonest employees apprehended and the dollars recovered from those apprehensions increased in 2011, indicating shoplifting and employee theft continue to plague many retailers. While shoplifter apprehensions rose 6% and dishonest employee apprehensions rose 3.3%, the recovery dollars from these apprehensions were up 13.9% for shoplifters and 5.6% for dishonest employees. It should also be noted that shoplifter apprehensions and recovery dollars have increased 8 of the past 10 years. (Note: For full results of the 24th Annual Retail Theft Survey visit: http://hayesinternational.com/news/annual-retail-theft-survey)

Lets now take a look at the causes behind the increase in shoplifting and dishonest employee apprehensions and recovery dollars.

Shoplifting

Our survey participants’ top five reasons for the increases were:
. Increase Organized Retail Crime (ORC) activity.
. Poor economy is causing more shoplifting to take place.
. Less store supervision and staffing gives shoplifters more opportunities.
. Better training and awareness of LP staff and employees.
. More open selling displays.

Some of our thoughts as to why shoplifting continues to plague the retail industry:

. Organized Retail Crime is Increasing:
Losses from Organized Retail Crime are reported to be over $30 billion annually, triple what they were just 10 years ago. These thieves work in teams often using distraction to commit their thefts, and often use ‘booster-bags’ and similar shoplifting devices. Losses routinely are reported in the thousands of dollars per incident.

. Stolen Merchandise Easier to Sell:
Many thieves have found that selling their stolen items through various on-line auction sites results in quicker sales and much higher prices than the traditional selling of items on the street or at a local flee market. This easy access to a much larger audience has resulted in shoplifting becoming a highly popular way to quickly obtain cash.

. Reduced Sales Floor Coverage / Customer Service:
Less employees on the sales floor servicing customers, creates greater opportunities for thieves to steal.

. Increase in Fraudulent Returns / Refunds:
Losses from fraudulent returns / refunds are estimated at $16 billion a year. Thieves create fraudulent receipts with desktop publishing software and color printers, and then return stolen items to the store for their full retail value.

. Reduced Social Stigma & “Low Risk/Non-Offensive” Crime:
While the amateur shoplifter is finding the social stigma of shoplifting to be lessening, many professional and hardcore thieves find shoplifting is both a highly profitable and low jail-risk endeavor.

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Dishonest Employees

Our survey participants’ top five reasons for the increases were:
. Increased focus on specialized investigations.
. Enhanced detection strategies.
. Improved investigative training and interviews.
. Less store supervision.
. Poor economy is causing an increase in theft.

Some of our thoughts as to why employee theft continues to plague the retail industry:

. Ineffective Pre-Employment Screening:
The first step to controlling internal theft starts at the point-of-hire; do not hire the “bad apple”’. Some retailers, in an effort to reduce their costs, have lowered their pre-screening requirements and are now hiring more ‘questionable’ employees. Anytime statistics show one out of every 36 employees is actually caught stealing by their employer, there has to be some type of breakdown in the pre-employment screening process.

. Less Employee Supervision:
With lower management levels, there is less supervision of employee activities which results in more opportunities to commit theft.

. Ease in Selling Stolen Merchandise:
Merchandise stolen by employees can be more quickly and easily sold, and for a much higher price using internet auction sites. This easy access to a much larger audience for stolen goods has resulted in more theft by those dishonest employees looking for quick cash.

. Decline in Honesty:
There are more dishonest people in the workforce today, and this decline in personal honesty is taking its toll. Almost daily we hear of business, government, law enforcement, celebrities, sports figures and even church leaders being caught up in questionable activities. Such events make it easier for “borderline” employees to rationalize their theft acts. In addition, the part-time workforce is growing, and it is not uncommon to find that many such workers have less loyalty to their employer, and are more apt to take advantage of opportune circumstances. $

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