Retail Loss Prevention And The Impact Of Employee Theft
Decrease Losses and Increase Profits with Human Engagement and Enhanced Security
In the United States, employee theft is almost as prevalent as shoplifting. Employees have more access to a retailer's inventory and can steal any item in a showroom or storeroom. Employee theft also occurs at retail cash registers or point-of-sale (POS) terminals. Another vulnerable business asset is proprietary information and consumer data. A well-rounded retail loss prevention initiative can help you reduce these types of employee thefts.
Shrinkage Can Occur Anywhere and Cause Big Losses
Inventory shrinkage cost retailers around $42 billion in 2014. Shoplifting thefts accounted for 38 percent of these losses while employee theft accounted for almost 35 percent of losses. Unfortunately, it is a common misconception that retailers can absorb these losses easily. Thieves do not realize or care that businesses must pass retail loss prevention costs on to consumers. These thefts can happen on the sales floor or in your warehouse. Third party vendors account for inventory shrinkage as well, whether intentionally or unintentionally. You must have a solid inventory control and security in place to combat the losses caused by inventory shrinkage.
Each United States consumer pays an extra $403 annually for price increases directly attributed to shrinkage. Worldwide, analysts estimate these losses cost retailers almost $129 billion annually. It is not only individuals who perpetrate these crimes. Organized groups target retailers and make a career of absconding with store inventory. The line between organized and employee theft often blurs in this situation as many professional crime rings recruit retail employees to aid in these thefts. Organized thieves use advanced technology and tactics to steal retail goods. You can protect your business assets with an equally advanced retail loss prevention initiative in place.
POS Theft Can Happen in Many Ways
The United States Chamber of Commerce estimates that employee theft accounts for 30 percent of business failures. Many of these thefts occur at retail POS stations. In addition to enforcing retail loss prevention policies that prevent staff members from removing cash from their tills, you must also put systems in place to diligently monitor other forms of POS theft. A cashier can steal at a POS terminal by charging a lower price for an item or not charging a consumer or friend at all. Additionally, POS staff can ring and then void items while trying to avoid detection.
In a Federal Bureau of Investigations report, the agency noted that three out of four employees steal company property. You can reduce employee theft by making your staff a part of your retail loss prevention efforts. Train your employees on how to prevent theft. This has a twofold purpose: it will give honest employees the skills they need to help save your business from losses and make employees who steal understand that you are serious about your retail loss prevention program.
Data Theft Can Cost Your Firm More than the Recovery Expenses
According to the Identity Theft Resource Center (ITRC) -- a non-profit data security information and assistance clearinghouse -- there were 793 data security breaches in 2014, an all-time high for that year. Retail establishments account for one in every three data breaches that occur. Employee theft can also play a role in this type of business asset loss. A key employee can give a data thief sensitive information that allows them to compromise your data. The cost of a serious data breach is difficult to measure in monetary terms. Along with the losses you can incur recovering from a data breach, you will also lose consumer trust, which will translate into lost sales. A strong data security program is as essential to retail loss prevention as security guards and cameras.
Business data breaches are the second only to medical record data breaches. For many years, businesses were the number one target of information thieves. Although this is not the case now, retailer data breaches draw the most media attention and cause the biggest losses in consumer confidence. These stories hit home with the public because retail store brands are familiar to them. Your business is -- or is similar to -- somewhere they shop and have sensitive information stored. Modern data thieves use cutting edge technology to illegally gather sensitive consumer data. You must have a retail loss prevention policy that includes measures that can monitor and alert you to these threats.
Retail Loss Prevention Is an All Encompassing Initiative
Among employee theft incidents, 32 percent of losses were over half a million dollars and 19 percent of those losses were over a million dollars. You do not have to accept shrinkage and employee theft as a part of doing business. While you cannot stop all theft, you can put measures in place to reduce it as much as possible; you can decrease data and employee theft at your business by following retail loss prevention best practices. One preventative step you can take is to use hidden cameras for blind spots. This will help your security team find thieves who are the most difficult to identify. You should also have point of sale coverage to deter and record theft at your cash registers.
There are more ways you can decrease data, inventory, and employee theft through your retail loss prevention initiatives. With employee monitoring software, your security team can receive alerts when suspicious activity takes place at a POS station. These systems can track sales, voids, no-sales, refunds, and other irregular transactions. For large chains, these security platforms can relay this information to remote security centers for security staff to analyze so that they can identify suspicious activity.
Another approach to retail loss prevention is employee engagement. More employers are beginning to understand that their employees are as important as their business assets and consumers. This concept is a part of workplace human relations. Human relations practitioners consider their staff human capital.
Managing your human capital is an essential part of a retail loss prevention initiative, which can help you reduce employee theft. Studies show that satisfied employees are less likely to steal from their employer. They are also more likely to support your corporate culture. When you make sincere efforts to increase employee satisfaction, you make your retail establishment less of a target. Thieves see a business with an overwhelming majority of attentive, loyal staff as a high-risk prospect. In addition to reducing theft, a fulfilled staff will create the best possible shopping experience for your consumers.
Employee theft is a top source of business asset loss. Your staff has more access to your property than anyone else. They also have direct access to your cash registers and control your store points of consumer egress. The integrity of your businesses information technology is also under the control of your staff. A positive work environment and best practice security measures can decrease your annual business losses and increase your profits.
Published August 12th, 2021