Secrets of Preventing Employee Retail Theft Revealed


Employee Stealing Prevention

Shoplifters aren’t the only threat to your retail store’s survival. Employee retail theft can be even more insidious and more damaging. How can you keep your store safe from unscrupulous employees? Here are the secrets of preventing the two types of employee theft—cash theft and inventory theft—from hurting your store.

The Real Cost of Employee Stealing

The average dollar loss per dishonest employee was $1,264 in 2018, according to  the 2019 National Retail Security Survey. One-quarter of retailers in the survey say internal theft has become “much more” of a priority in the past five years, while nearly 35% say it’s “somewhat more” of a priority. All told, that means 60% of retailers are increasingly focused on internal theft prevention.

The difficulty of finding qualified employees leaves retailers vulnerable to employees who may be less than honest, while concerns over lawsuits from employees mean fewer retailers are taking action even when they discover employee retail theft. The best way to deal with employee theft is to prevent it in the first place.

Employee Stealing Prevention

5 Ways to Prevent Cash Theft

1. Place Security Cameras at the Register

Video surveillance cameras are more sophisticated than ever; you can choose cameras that focus narrowly on the cash register area to capture any activity. Often, just having security cameras visible in place is enough to deter employee cash theft. Monitor security recordings daily for any suspicious activity.

2. Require Employees to Log in When at the Register

Newer POS systems with features such as biometric identification via fingerprint or facial recognition can ensure employees are accurately identified. This can help you spot trends such as cash shrinkage when certain employees are manning the register.

3. Require Manager Approval of Transactions Often Associated with Employee Retail Theft

For example, requiring a manager to approve voided transactions, returns or gift card sales can help reduce the risk of employees voiding transactions and pocketing the cash or handing a customer a blank gift card while keeping the activated card for themselves.

4. Do a Daily Cash Count

Balancing the cash drawer against the day’s receipts remains the best way to spot “skimming,” or stealing small amounts of cash from the cash drawer. Develop instructions for employees to do the closing and have them work in teams, switching the teams regularly.

5. Deposit Cash in the Bank Yourself

Employees designated to deposit cash may steal some of the money. Taking responsibility for cash deposits yourself is the best way to avoid this risk. Since you don’t want to go to the bank every evening, use a safe in the store (or in your home) to secure the cash and do a weekly deposit.

5 Ways to Prevent Inventory Theft

1. Use an Inventory Management System

An inventory management system that integrates with your POS and accurately tracks your inventory in real-time can alert you to possible employee retail theft before it goes to far. Review your inventory reports regularly to spot any unusual trends, such as a lot of small or expensive items leaving inventory.

2. Implement a Buddy System

Employees who are stealing inventory often hide items in the trash to steal at the end of the day. You can prevent this by requiring employees to take out the trash in teams and frequently switching the teams to avoid co-conspirators working together.

3. Check Bags at the End of the Day

Inspect employees’ handbags, backpacks or other bags before they leave for the day. It’s a simple, but effective, way to deter inventory theft.

4. Systematize Inventory Receiving

A lot of inventory theft can occur in the stockroom. Employees may steal inventory before it ever gets to your stockroom shelves. Require managers to be present when taking delivery of inventory and to inspect shipments before signing for anything.

5. Have a Strict Policy for Returns

Thieving employees may work with partners to steal merchandise and then have the partner return it to the store for a refund. Requiring receipts for any return is a good way to prevent fraudulent returns. Requiring identification for people making returns can help you spot “serial returners” who may be engaged in a crime ring with your staff.

The number-one way to prevent employee retail theft: Conduct background checks before hiring. No matter how much of a rush you are in to fill a position, it’s not worth the risk to skip a background check on someone who’ll be handling cash, have access to customers’ payment card data, and be able to access all of your store inventory.

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Rieva Lesonsky Rieva Lesonsky is a Columnist for Small Business Trends covering employment, retail trends and women in business. She is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Visit her blog, SmallBizDaily, to get the scoop on business trends and free TrendCast reports.