Retail Loss Prevention’s Biggest Concern: Internal Theft
There’s a very interesting study out last week from the Loss Prevention Research Council (LPRC) that Progressive Grocer featured in Retailers Misperceive Extent of Their Own Shrink. In the article there were two factoids that we’d like to call to your attention.
First, the report found that
“86 percent of respondents said they spend the most or second-most time working on loss problems related to internal product theft. Some 62 percent said they spend the most or second-most time working on loss problems related to internal cash theft. And 32 percent said that they spend the most or second-most time working on external theft, including organized retail crime.”
Clearly, internal theft from employees is the largest problem that retail loss prevention professionals face. “Entire retail chains have gone out of business,” writes Ronald Bond for Entrepreneur.com, “due to their inability to control losses from theft. The biggest threat facing storeowners is employee theft, which accounts for nearly half of inventory shrinkage–more than shoplifters, more than administrative error and more than vendor fraud.” [Emphasis added.]
In Employee Screening: An Ounce of Prevention is Worth a Pound of Lobsters, we pointed out that 75 percent of all employee thefts go unnoticed, according to U.S. Department of Commerce.
So if internal theft takes up most of an LP pros’ day, what’s the solution? According to the LPRC survey, here’s a second finding of interest:
“Almost two-thirds (65.5%) of respondents think implementing new technology is very important for their companies’ loss prevention endeavors.”
Hardware-wise, Closed Circuit Television (CCTV) can be a good deterrent. But if 75 percent of internal thieves are never caught, wouldn’t it be easier to not hire high risk employees in first place than to catch them in the act?
With software — specifically identity resolution software — retailers can get a clear comprehensive, composite depiction of current employees and potential new hires. Identity resolution solutions aggregate information from existing negative databases, uncovering convictions, bad debt, driving histories, lawsuits and more.
Great article. I just recently began a blog called Joe’s Bunker, that focuses on retail theft and loss prevention issues. I am currently writing a series about maintaining consistently low shrink numbers. My next article will review tools and technology, and I’d love to cite some of your work here. Please visit me, if you like and let me know what you think.
I, too, believe that the first line of defense from internal theft is the hiring process, and that employee screening is an extremely important tool to help reduce internal theft.
Great site, too, btw. I’m definitely a new fan/subscriber.
Technology can be utilized to prevent theft prevention. There is very good solution for retail theft prevention as well as for customer interest identification. Check out video demo and solution on below link.
http://www.einfochips.com/index.php?option=com_content&view=article&id=470&catid=101