Shoplifting & Employee Theft Losses Continue to Plague Retailers

We recently completed our 25th Annual Retail Theft Survey and the results reflect a much greater problem than many people realize.  These thieves (shoplifters and dishonest employees) are stealing profits from retailers thus resulting in higher retail prices for consumers, and even putting some stores out of business.  This year’s survey reports on 23 major retail companies, representing 18,900 stores, with retail sales of almost $600 billion (2012). The survey participants were all large retail companies (Department Stores, Mass Merchants, Big Box) who practice true loss prevention strategies, yet they still apprehended over 1.1 million shoplifters and dishonest employees in 2012, and recovered more than $189 million from those apprehensions.

Highlights from this highly anticipated annual theft survey include:

Participants: 23 large retail companies with 18,900 stores and over $596 billion in retail sales (2012).

Apprehensions: 1,145,688 shoplifters and dishonest employees were apprehended in 2012, up 7.3% from 2011.

Recovery Dollars: Over $189 million was recovered from apprehended shoplifters and dishonest employees in 2012, up 18.1% from 2011.

Shoplifting

Apprehensions: Survey participants apprehended 1,074,593 shoplifters in 2012, an increase of 7.4% from the prior year.

Recovery Dollars: Dollars recovered from shoplifting apprehensions totaled over $138 million in 2012, a substantial 22.7% increase from 2011. This was the 10th increase in shoplifting recovery dollars in the past 11 years.

For the 16th consecutive year, dollars recovered from shoplifters where no apprehension was made (over $46 million) increased. In 2012, this increase was a substantial 25.2%.

Case Value: The average shoplifting case value in 2012 was $129.12, which was an increase of 14.2% from 2011’s average case value.

Dishonest Employees

Apprehensions: 71,095 dishonest employees were apprehended in 2012, up 5.5% from 2011.

Recovery Dollars: Over $50 million was recovered from employee apprehensions in 2012, up 7.0% from 2011.

One out of every 40 employees was apprehended for theft from their employer in 2012. (Based on over 2.8 million employees.)

Case Value: The average dishonest employee case value in 2012 was $715.24, which was an increase of 1.4% from 2011’s average case value.

On a per case average, dishonest employees steal approximately 5.5 times the amount stolen by shoplifters ($715.24 vs $129.12).

We asked our survey participants what they thought was the cause(s) behind the continued increase in shoplifting apprehensions and recovery dollars in 2012 and they contributed the following to increased shoplifting activity:

  • Organized Retail Crime (ORC) activity is growing and getting more complex
  • Economic conditions are not getting better
  • Reduced staff/payroll restrictions (less associates on sales floor)
  • Increased LP/AP staff productivity
  • Overburdened Criminal Justice System
  • Stronger awareness among store personnel
  • Higher demand for store goods and store credit

We also asked are survey participants what they thought was the cause(s) behind the continued increase in employee theft apprehensions and recovery dollars in 2012, and they contributed the following to increased employee theft activity:

    • Economic conditions are not getting better
    • Additional resources with more focus and priority towards  DEs
    • Better process controls and exception reporting capabilities
    • Increased abuse of Loyalty Programs
    • Enhance detection strategies
    • More PT employees and less store supervision

Additional Information – Free Consultation!

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How can companies reduce their vulnerability to shoplifting and internal theft? Listed below are a few suggestions:

SHOPLIFTING:

Provide good customer service: Shoplifters want and need privacy; so take it away from them.  When they respond “I’m just looking”, teach employees to say “Ok great, I’ll keep my eye on you in case you need any assistance”.  Honest customers are ok with this (you are there if they need help), and this is the last thing a shoplifter wants to hear.

Have employees walk the sales floor: Keep visible, and keep displays neat and organized (so missing items can be more easily noticed).

Have good sight lines on the sales floor: Do not block the view of high value and highly popular items, and keep these items near employee work areas.

Limit Items on sales floor: Limit the number of certain items (high value, highly pilferable) placed on the sales floor.  This will reduce vulnerability to large losses of these items and make it easier to identify missing items.

Use technology: Such as EAS (electronic article surveillance), merchandise alarms, CCTV, ink/dye tags, product tie-downs, and bulky packaging.  Also ensure policies/procedures regarding technology are adhered to.

Know your merchandise: Especially highly popular items, high value items, what’s stolen most often and what’s easily stolen.  Study why items are taken, evaluate their locations and packaging – then make changes.

INTERNAL THEFT:

Effective Pre-Employment Screening Process: The first step to controlling employee theft starts at the point-of-hire; do not hire the “bad apple”. A thorough pre-employment screening process including, reference checks, “honesty testing”, SSN trace/verification, criminal background checks, and drug testing is most important.  Money spent up-front in the screening process to identify ‘quality’ employees will result in savings from reduced turnover and losses.

POS Exception Monitoring: Use a POS exception based monitoring program to quickly identify possible fraudulent transactions at the point of sale (ie. excessive refunds or voids; refunds or voids before or after store hours; .etc.).

Auditing for Compliance: Ensure consistent compliance to company policies and procedures by conducting loss prevention/shrink audits on a regular basis.  By reducing the opportunity, you reduce the chance of theft/loss.

Training & Awareness: Invest in loss prevention training and awareness programs for all employees, and a reward program for employees who report dishonest activities.

“Back to Basics”: Ensure “LP basics” are in place and adhered to at all times:

–    Door controls (OH doors locked and Exit doors alarmed)

–    Trash controls (Monitored, supervised and dumpster locked)

–    Package/bag checks (conduct whenever an employee exits the location)

–    POS controls (2 people witness and verify refunds and voids)

 

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