Shoplifting and shoplifters are just a retail life fact of life, similar to the “oldest profession in the world”, it isn’t going away. And if you are naïve and think that shoplifting will not happen in your store then don’t read any further since you won’t be in business much longer anyway. If you are a retailer you understand that shoplifters are like pond scum, it stinks and is a serious distraction from a beautiful environment.
Preventing shoplifting is no different than the approach to any other business problem. Control it and minimize the distractions so you can stay focused on what is really important, making money. You can achieve this by using an Electronic Article Surveillance (EAS) system. And as huge coincidence we happen to sell Checkpoint systems (sorry for the shameless commercial).
But getting back to the issue. EAS systems are proactive. Some retailers are under the impression that if they put a camera system (OK, we sell cameras also, no more commercials I promise) in their store that this will deter shoplifters. Camera systems are passive. Unless you are watching it live at all times it is not as effective. Shoplifters know this. In addition the cost to cover every location in the store where a shoplifter may conceal merchandise is in most cases cost prohibitive.
Merchandise is tagged or labeled by your staff. When a shoplifter tries to rip you off the protected merchandise trips the sensors at the front doors alerting your staff. Merchandise stays tagged at all times until your people remove or deactivate it. It’s proactive, all day, everyday. There is no video to watch or review. Shoplifters know what EAS systems look like and how they work. In most cases they just simply go elsewhere (like your competitor who isn’t protected). This is a much stronger deterrence than a camera system.
In summary, the key is to do this in the most profitable, cost effective way possible. You have enough work to do every day. I guess I can sum it up like this; a Checkpoint security system is like having shoplifting prevention flying on autopilot.
I almost forgot…pond scum can be controlled with chemicals sold at any farm and seed supply store.
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Internal theft also known as employee theft causes close to fifty percent of all retail business loss. In thirty years of conducting employee theft investigations I am still shocked by how poor a job most businesses do in common sense prevention. For example I conducted an investigation where $5000 in forged business checks were cashed. It turned out that the stock of checks was unsecure in an office supply room. The janitor’s stole 20 checks from the middle of the stack, waited a while and them began to cash them. These checks should have been secured in a locked cabinet with strict controlled access. The checks should be logged out and issued to the person that processes them.
We drop our guard because it is “more difficult” to do it the right way. You prevent employee theft by doing it the “right way” not the easy way. The key is “prevention”. Another excuse is we say, “oh I trust that person, they would never do that”. Those words get more business people in trouble. When a management person says that they are basically saying that they have no business common sense.
Another case involved employees that stole hundreds of thousands of dollars in product from a warehouse they worked in. They had keys to the warehouse that contained millions of dollars of merchandise. The alarm system was not reporting opens and closes. So coming back at night and loading up a truck was not a problem.
Internal theft or employee theft lurks around every corner. You have to be actively watching for it to prevent it. Internal theft will not go away or stop on its own. In fact it will get worse. Get your policy manual off the shelf, dust it off, update it and make sure people understand that this is your companies “business bible”, live it, enforce it! This doesn’t mean that it never changes. As your business changes your policy and procedures should change.
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In some companies employee theft has been occurring for so long that it has festered into a serious dilemma that is not only right under managements nose but also actually condoned. Let’s use a retail store as an example. Management overlooks employees who take small items such as candy, sodas… It goes on long enough that it not only becomes the norm but also happens right in front of management. Managers do nothing about it. So the employees learn that this is acceptable. Even worse, in some cases the same managers do it to!
The candy bar that sells for $1.25 (remember when they were $0.50?) stolen by an employee does not just cost your business a $1.50. If your stores profit margin is 2% that employee just ate $62.59 (1.25 / .02). You will have to sell $62.50 to just BREAK EVEN. Let’s say that same employee does that four times a week for a year. That’s $13,000.00 that you will have to sell to break even on a thief with a sweet tooth.
If management condones it then others will see and in many cases do the same thing. “It’s alright” becomes the culture. Which means employee theft is the norm. I can tell you for a fact that it will not stop there.
Look at the issue in another way. Some companies have a policy that if a cashier is only short $5.00 (or whatever) at the end of the day that they do not look into it because it take to much time. That tells cashiers that it is OK to steal $4.99 and or less. That’s lunch money, gasoline…(OK not very much gasoline, but still!).
This problem is one that can simply sneak up on a business. It starts out small and gets much bigger. That’s the culture that has been established. Most employee theft gets its start this way. After that the thief gets more confident because “it’s alright”. We then wonder why it has happened.
You must establish a zero theft tolerance policy. A line must be drawn in the sand. You must not just look the other way at this and hope. Employee theft cannot and will not go away on its own.
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Corporate fraud investigation and I have had a relationship for over thirty years. I have come to a sad but simple conclusion. When management uses the wrong kind of trust in a business environment all kinds of things go wrong. If you deal with employees, assets, cash and the rest you need to take a serious look at yourself. It usually starts this way. I have concluded an investigation, the employee has confessed and I am in the process of filing criminal charges. At this point the owner or manager says to me something like “I thought I could trust that person”.
The manager or owner feels guilty, is angry and then begins to question their skills. Believe me it is not their skills that they should be questioning. There are two kinds of trust in this world: personal trust and business trust.
Personal trust is the kind of trust that you have with your best friend. You are always there for each other. You can trust them with your car, house, spouse and dog (well maybe the dog). You know that no mater what happens they have your best interests in mind.
Business trust is defined with three words: Trust But Verify. That’s it! We do not have the luxury of anything else.
Most reasons that we end up in a corporate fraud investigation involve management using personal trust in a business environment. This is a business environment not a personal one and if your management style is to be “friends” with your employee then you should need to change careers.
We are responsible for an incredible amount of liability and assets. In many cases you’re not the owner of the business. We as a professionals realize that we must protect those assets to keep the company profitable, which in turn insures that; your employees have a job (and so do we).
Trust but verify! I am not saying that you should always be watching over employees shoulder. A healthy work environment gives employees the ability to grow and do express their own style. But that doesn’t mean that we just walk away and let them run loose either. People want a structured work environment. They want to know what they should and should not do and how to do it.
So what do you do? Here is an example; a cashier is checking their drawer in for the end of their shift. They count down the cash, checks, and charges. You need to verify it by recounting all or at least some of it, like the cash. When they say to you “I just did that” you reply, “ It looks like you did a great job to, it is accurate, thank you and good work”.
As a professional you cannot use personal trust in a business environment unless a frequent corporate fraud investigation is your favorite thing.
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What should you do if there is a customer caused alarm on your stores Checkpoint security system? Here are some helpful tips:
- Approach the customer in a friendly manner and state “Pardon me, we must not have properly checked out your purchase. Please come back into the store, and we will take care of that for you.”
- Ask the customer for their bag – do not grab it.
- You should walk the purchase through the checkpoint security system pedestals verifying the alarm.
- Check all merchandise against the receipt.
- If the merchandise checks out – pass all items over the deactivation pad another time.
- If you find merchandise that has not been purchased – at this time ask the customer if they would like to purchase it.
Another way to remember this process when you approach the customer is to use the “vowels” (a,e,i,o,u) of alarm response:
A Address the customer. “Excuse me madam/sir…”
E Explain what has occurred. “…We must have failed to deactivate or remove an inventory control label or tag from the merchandise you purchased…”
I Invite the customer back into the store… “Please step back into the store with me so I may assist you…”
O Offer an apology. “…I am sorry for this inconvenience to you.”
U Understand what alarmed the system.
Common sense, training, your checkpoint security system and being prepared will stop shoplifting.
