High-profile shoplifting cases such as Winona Ryder’s Beverly Hills shopping spree last year and local cases of security guard assaults on suspected shoplifters give the impression that retail theft is an outside job.
But a recent survey shows retailers lose more inventory from insiders–employees–than they do from shoplifters.
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Total inventory losses are $53.6 billion a year, according to a survey of 118 national retailers released this year by the University of Florida. Of that, 48 percent was attributed to employee theft, 32 percent to shoplifting and 20 percent to administrative errors and vendor fraud.
The problem peaks during the holiday shopping season as retailers ring up about a third of their annual sales. Thieves thrive in large crowds with the less-experienced, largely part-time workforce at many stores.
And retailers often pass the cost of inventory losses on to consumers. The survey found that the average family of four will pay more than $400 in higher prices at the register this season to offset the inventory losses, known as shrink.
“That is the single largest form of larceny in the world. Bar none. Retail theft trumps them all,” said Richard Hollinger, director of the National Retail Security Survey and a sociology professor at the University of Florida. He said retail theft outranks motor vehicle theft, bank robbery and household burglary combined as the nation’s largest form of property theft.
Retailers have focused more resources on tracking and trying to prevent employee theft in the last five years as technology has improved.
What shoppers notice most are the systems directed at shoplifting: cameras, cables on expensive items such as fur coats, locks on jewelry cases, electronic security tags and shoplifting deterrence signs.
Systems aimed at employee theft are more discreet, such as software that mines cash registers and mystery shoppers who report employee behavior to retailers. The methods and systems vary from retailer to retailer, said Richard Soloway, chairman and CEO of Napco Security Systems Inc.
“The billions of dollars in loss that take place in stores has to be mitigated some way,” Soloway said. “The bigger the operation, the bigger security system they have, from sugar cube-sized cameras to the domed ones on the ceilings.”
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Edited by Lara Weber ([email protected]) and alBerto Trevino ([email protected])