30th Annual Retail Theft Survey

Theft continues to plague the retail industry, with shoplifting leading the way!  In 2017, Shoplifting apprehensions increased 2.3%, with the dollars recovered from these shoplifters increasing almost 13%. This is the 8th rise in both shoplifter apprehensions and dollar recoveries in the past 10 years.  Recoveries from shoplifters where no apprehension was made increased for the 21st consecutive year, up an amazing 18% in 2017. While dishonest employee apprehensions and recovery dollars were down (almost 4% and 7% respectively), retail theft overall continues to be a serious problem for retailers negatively impacting their bottom-line, which results in higher prices to consumers.

Highlights from this highly anticipated annual theft survey include:

  • Participants: 21 large retail companies with 16,409 stores and over $428 billion in retail sales (2017).
  • Apprehensions: 432,046 shoplifters and dishonest employees were apprehended in 2017, up 1.7% from 2016.
  • Recovery Dollars: Over $188 million was recovered from apprehended shoplifters and dishonest employees in 2017, up 8.1% from 2016.
  • Shrink: 62% of survey participants reported an increase in shrink in 2017, with just 29% reporting a decrease in shrink, and 9% reported shrink stayed about the same.

SHOPLIFTING

Apprehensions: Survey participants apprehended 391,760 shoplifters in 2017, an increase of 2.3% from the prior year. This was the 8th increase in the past 10 years!

– 10 of 21 retailers (47.6%) had an increase in shoplifter apprehensions

– 10 of 21 retailers (47.6%) had a decrease in shoplifter apprehensions

– 01 of 21 retailers (04.8%) had no change in shoplifter apprehensions

Apprehension Recoveries: Dollars recovered from shoplifting apprehensions totaled over $149 million in 2017, a substantial 12.9% increase from 2016.

– 11 of 21 retailers (52.4%) had an increase in shoplifter recovery dollars

– 09 of 21 retailers (42.8%) had a decrease in shoplifter recovery dollars

– 01 of 21 retailers (04.8%) had no change in shoplifter recovery dollars

Non-Apprehension Recoveries: For the 21th consecutive year, dollars recovered from shoplifters where no apprehension was made (over $185 million) increased. In 2017, this increase was an amazing 18.1%.

– 12 of 16 retailers (75.0%) reported an increase in shoplifting recovery dollars     without an apprehension

– 02 of 16 retailers (12.5%) reported a decrease in shoplifting recovery dollars    without an apprehension

– 02 of 16 retailers (12.5%) reported no change in shoplifting recovery dollars without     an apprehension

Survey participants noted the following reasons as to why their Shoplifting apprehensions and recovery dollars increased or decreased in 2017:

Increased:

  • Less risk with selling stolen merchandise online
  • Change in product lines – carrying more theft desirable items
  • Increased focus on shoplifters and on high theft categories/departments
  • Felony thresholds being raised/increased in various states
  • Nationwide drug crisis increasing

Decreased:

  • Implemented a more thorough return process/policy
  • Increased focus on prevention, instead of apprehension
  • Better merchandise display standards
  • Better EAS tagging compliance

 DISHONEST EMPLOYEES

  • Apprehensions: Survey participants apprehended 40,286 dishonest employees in 2017, down 4.0% from 2016.

– 12 of 21 retailers (57.2%) had an increase in employee theft apprehensions

– 09 of 21 retailers (42.8%) had a decrease in employee theft apprehensions

  • Recoveries: Dollars recovered from dishonest employee apprehensions totaled over $38 million in 2017, a decrease of 7.0% from 2016.

– 10 of 21 retailers (47.6%) had an increase in employee theft recovery dollars

– 11 of 21 retailers (52.4%) had a decrease in employee theft recovery dollars

  • Case Value: The average dishonest employee case value in 2017 was $966.61, which was a decrease of 3.1% from 2016’s average case value ($997.89).
  • One out of every 35 employees was apprehended for theft from their employer in 2017. (Based on comparison data of over 1.4 million employees.)

 Survey participants noted the following reasons as to why their Employee Theft  apprehensions and recovery dollars increased or decreased in 2017:

Increased:

  • Increased focus to eliminate DEs early in their tenure
  • Use of specialized investigative team
  • Increase collusion between employees & customers
  • Enhanced POS exception reporting software resulted in quicker DE identification

Decreased:

  • Less focus on DEs, and more on shoplifting
  • Eliminated loyalty fraud
  • More associate training and focus on prevention
  • Less associates resulted in less employee cases

Here are a few actions retailers should take to reduce their vulnerability to losses:

Shoplifting Prevention Tips

  • 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 in sight of employee work areas.
  • Hire honest and motivated employees: Train them to prevent shoplifting (what to look for, how to respond to a possible shoplifter, etc.).
  • Use technology: Remember, technology (EAS: electronic article surveillance, CCTV, merchandise alarms, ink/dye tags, product tie-downs, Keeper boxes, etc.) must be managed. Also ensure policies/procedures regarding technology are adhered to: EAS tagging 98% or higher, items required to be alarmed or tied-down are done so, etc.
  • Know your merchandise: Especially highly popular items, high value items, what’s stolen most often and what’s easily stolen. Study why these items are taken, evaluate their locations and packaging – then make changes as needed.
  • Limit item quantity 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.
  • Prosecute shoplifters: Thieves know which retailers prosecute and those that do not. Prosecution can be a good deterrent.

Employee Theft Prevention Tips

  • 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/integrity 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 (cash or credit); refunds or voids before or after store hours; too many voids, excessive reward credits, dummy SKU usage, etc.).
  • Auditing for Compliance: Ensure consistent compliance to company policies and procedures by conducting unannounced loss prevention/shrink audits on a regular basis. Auditing not only helps keep awareness high, but 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 (Process supervised, clear bags, cartons flattened, and dumpster locked)

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

–  POS controls (2 people witness and verify refunds, voids, price overrides, etc.)

–  Sales Verifications (“Pass-outs” are an easy way to steal with friends/relatives; have

management conduct daily unannounced sales verifications)

–  Opening and closing (Always with 2 employees – security and safety issue)

The full survey can be viewed and/or downloaded/printed from on our website at:

http://hayesinternational.com/news/annual-retail-theft-survey/

 

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