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Fall 2008
Strategies to Prevent Shoplifting and Employee Theft

In partnership with the National Retail Federation and ADT Security, retail-loss expert Dr. Richard Hollinger of the University of Florida Department of Criminology, Law and Society, revealed the results of his latest annual National Retail Security Survey over the summer. Retailers in the 2008 annual survey results estimated a loss of $35 billion in sales the prior year due to the four major sources of shrink: vendor fraud, administrative errors, shoplifting and employee theft-the last two accounting for the vast majority of losses.

That’s down from the previous year’s survey findings, but there’s no telling what shoplifters will be up to this holiday, so now is the time to take measures to protect your business.

Tips to prevent shoplifting

Loss experts agree that a crucial way to prevent shoplifting is to have well-trained and alert employees who how to spot a potential shoplifter. Employees need to watch for customers who:

  • Avoid eye contact

  • Appear nervous
  • Wander the store without buying
  • Leave the store and returns repeatedly
  • Linger in a location that employees have a hard time monitoring
  • Constantly keep an eye on store employees and other customers.

In addition to training your employees to spot shoplifters, general shoplifting-prevention techniques include:

  • Staying alert at all times.

  • Greeting all customers.
  • Asking lingering customers if they need help.
  • Knowing where shoplifting is most likely to occur in the location.
  • Using a log to share suspicions about shoplifters among employees.
  • Displaying signs that “Shoplifters will be prosecuted.”

When shoplifting is suspected, it’s crucial for your employees to know how to handle incidents. The Los Angeles Police Department recommends that retail employees:

  • Never directly accuse anyone of stealing (call security instead).

  • Give the person a chance to pay for the item they “forgot” to pay for by asking, “Are you ready to pay for that?” or “Can I ring you up?”
  • Never try to physically stop a shoplifter. Call security.
  • Cooperate fully with center security and the prosecutor if/when the time comes.

Strategies to reduce employee theft

Some specialty retailers say employee theft is a bigger threat to their bottom line than shoplifting. Experts agree that the best defense is a watchful eye. Try these strategies:

Stop by your store without warning. Make periodic (yet randomly timed) unannounced visits to each and every retail location.

Spot-check inventory/drawer. During unannounced visits, announce: “I’m just double-checking inventory numbers and doing a register check.” Pick a few products and check physical inventory against inventory sheets/POS inventory figures. If possible, run a cash drawer reconciliation. Announce: “I’ll be back again soon to run through this again.” This lets employees know management is keeping its eye on the ball.

Have an inventory-tracking system. Use a POS system that tracks inventory automatically or, at a minimum, use paper-based inventory-tracking sheets to send a signal to employees that inventory is indeed being monitored.

Check the z-tape. Check those z-tape numbers. If yesterday’s z-tape was number 24 and today’s is 27, what happened to 25 and 26?

Train employees. Provide all employees with training on theft-prevention, both shoplifting and employee theft. Discuss the ways the company is prepared to detect either.

Encourage anonymous tips. Publish a phone number employees can call to leave an anonymous message if they suspect a co-worker of stealing product or cash. If employees are aware their co-workers are watching and could report them, they will be less inclined to get sticky fingers.

Watch for employees with calculators and receipt books. Many retailers say that a sure sign of a problem is an employee who has a calculator next to the cash drawer, or a separate receipt book tucked into a drawer or pocket.

Check deposits. Don’t just check if the deposit numbers match the sales figures. Also check that deposits are being made routinely and when expected (particularly easy to do through online banking). If deposits are typically made every day and then suddenly they are being made every-other day, find out why.

Check cash-to-credit purchase ratios. If the typical purchase ratio is 30 percent cash to 70 percent credit, and then suddenly the ratio is 10 to 90, it’s time to ask a few questions.

Watch the “no-sales.” Many retail owners know that the leading indicator of theft is a single piece of data on your x-tape: the “no sale” number. If a typical day’s no-sale tally is four, but every time a particular employee works the tally is 10, there may be a problem.

Of course, there’s no way to completely protect yourself against shoplifting and employee theft, but if you make customers and employees aware that you’re keeping a close eye on your business, experts say that’s the first and most-critical step in shrinking your shrink this holiday season.


Nancy Tanker

Nancy Tanker is the former managing editor of Specialty Retail Report. She has covered the specialty retail industry for nearly 15 years for a variety of publications and can be reached at srrtanker@mchsi.com.

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