6 Tips to Prevent Retail Employee Theft
Studies show that U.S. retailers lose a total of $54 billion a year to retail shrinkage. This equates to an average of 1.3 percent of total sales lost, which can have a significant impact on a retailer's bottom line. For small and midsized companies, this alarming statistic could make or break their business.
While fraud and criminal theft by external parties, including shoplifters and organized criminals, is on the decline, dropping from 65 percent to 43 percent in recent years, according to a survey conducted by PwC and the Retail Council of Canada (RCC), employee theft is on the rise, growing to 33 percent from 19 percent during the same time period.
A recent report commissioned by Retail Knowledge reveals that employee theft accounted for the largest area of retail loss, with theft of inventory at 37 percent and theft of cash at 20 percent.
Retailers must avoid the misconception that employee theft can't happen to them. Unfortunately, internal theft can have a detrimental domino effect that ultimately impacts profit margins, team morale and client trust. With a number of factors affecting the retail landscape, including increased competition, changing consumer behavior, growing online sales and the high cost of storefront rent, companies need to look within and find more efficient ways to protect their assets or risk going out of business.
Here are six tips for combatting employee theft:
1. Know your people: According to the PwC and Retail Council of Canada report, three out of five retailers perform a reference check, while only 29 percent request new employees to pass a police background check. It's important to be vigilant when giving new employees access to your business. Background checks will ensure you know who you're hiring and keep your staff and assets safe.
2. Policy equals transparency: Motivate your staff to be a part of the solution by setting strong policies that require their participation to be successful. Ensure adequate training is given to staff at all levels and set clear consequences for theft and other misdemeanors, which could range from verbal warnings to zero tolerance (i.e., immediate termination with cause). These tactics will empower your staff, challenge them to be aware of their behavior and establish a level of accountability for unruly behavior companywide.
3. Consistency means stability: Shifting schedules and duties can easily expose your business to vulnerability. Designate staff members to a specific task and limit "moonlighters." Staff at least two employees for open and close duties, and avoid staffing employees for solo shifts at any time. Also, using a safe and assigning one person to be accountable for deposits means security access is limited
4. Stay on top of the bottom line: When it comes to inventory, awareness is key. Keeping track of what's in stock can be as simple as shredding sensitive documents and keeping a close eye on your financials. Checking your monthly statements and working closely with your bookkeeper means you always know your bottom line.
5. Technology is the best prevention: Surveillance cameras placed at critical locations throughout a store can provide clear evidence, enabling companies to verify activity and interactions that occur. With today's technology, access to high-definition cameras and smart surveillance software is attainable for businesses of all sizes. For many employees, just knowing that a surveillance system is in place is enough to deter them from a potential theft.
6. Real-time access: Today's advanced technology means that a tap of a button on your smartphone can give you access to real-time footage. High-definition cameras allow employers to zoom into footage of items as they're being scanned at a cash register, inventory in a storage room, or entry and exit points, with clear detail.
While employee theft accounts for a staggering amount of retail shrinkage, employers need to be proactive in their vigilance against loss prevention. By encouraging transparent policies and using new technology, companies can reduce the impact of internal theft and effectively improve their bottom line.
Dwayne Healy is the director of business development, retail and hospitality, at Avigilon, a provider of high-definition surveillance solutions.