5 Sources of Retail Theft

If you own and operate a retail store, you have more to be concerned about than your profit margins and deciding how to best advertise your business. You also have to be careful of various types of crimes, particularly with retail theft. There are many different types of retail theft, which can originate from your customers, employees and other sources.

According to the Centre for Retail Research, employee theft counted for 35 percent of the thefts in 2011, internal error and administrative duties for 16.2 percent and shoplifting was the most, at 43.2 percent. The total loss was $41 billion, $19 billion and $51 billion, respectively.

1)  Employee Theft. One of the top sources of retail theft is employee theft, which includes employees stealing items themselves, forging inventory logs and letting their friends or family members steal from your store. Some stores even report that employee theft is their number one concern, especially with smaller retail outlets that don’t have the security larger enterprises do. Always be sure to screen your applicants carefully, including conducting background checks, and have a verification system in place for inventory.

2)  Shoplifting. With more than 40 percent of all retail thefts due to shoplifting and losses totalling in the billions, it is no wonder this is high on the list. Some shoplifting occurs on the spot, simply due to opportunity, while others are large, detailed organized crimes that are well planned out, thus harder to prevent. Another thing to consider is the banning of plastic grocery bags. While better for the environment,Seattle Pi reports that this ban may increase shoplifting risk because store owners and employees aren’t able to see items stolen as easily.

3)  Administrative Errors.  Another surprising source of retail theft is internal and administrative errors. This includes errors with paperwork, computer systems and human errors that can happen internally. This is actually the third most common source of theft in the retail business, even though much of it is completely innocent and purely an error. But it is also responsible for more than $19 billion in 2011.

4)  Returns Fraud. Returns fraud is a type of crime that occurs when a customer falsifies a return in some way. In some cases, they have purchased and used the item and are now returning it for a refund, even though it is used. Others shoplift an item from that or another similar store, then return it to get a refund. Additionally, some more experienced criminals steal the receipt tape in order to complete a false return. Some things to look out for with returns fraud are a big increase in returns, the return policy not being enforced by employees or a high shrink rate.

5)  Vendor Fraud. While vendor fraud is the least common form of retail theft, it is still something to be aware of. Vendor fraud doesn’t happen as often as other sources of retail theft, but it is the easiest for vendors to do without being caught and generally done when there are outside vendor stocking your store. What generally happens is a vendor steals some of the items they are supposed to stock in the store, resulting in inventory shrinkage.

Retail theft cannot always be prevented, though you should try your best with security personnel and surveillance equipment. Additionally, protect your business from these risks with employee dishonesty insurance coverage and a crime insurance policy.