A National Retail Federation study shows retailers lose about $50 billion in inventory theft every year. And while you might assume the bulk of this is from external customer shoplifting, at least 30 percent—roughly $15 billion—is actually from employee theft. And that doesn’t even include outright cash theft.
While these figures include all retailers, consider that grocery stores are visited more regularly than other retailers, and that they employ a significant portion of overall retail workers. Given that grocery profit margins are already perilously thin, a savvy grocer must consider employee theft right on up there with shoplifting as one of the most significant threats to their bottom line.
So, what are some effective ways of applying retail technology to curb common types of employee theft in retail groceries?
Shoplifting isn’t just for your customers
Shoplifting—or “lift and leave”—isn’t limited to your external customers. In fact, being around merchandise day in and day out can present far more opportunity for employees than for regular shoppers.
One of the best ways to deter this is by installing video surveillance cameras with integrated DVR technology, both in the store’s aisles and in the stockrooms. The simple fact that cameras are in place and visible reduces likelihood of shoplifting. And if you ever need to stop a theft in progress—or provide evidence after the fact—the recordings provide the evidence you need.
There’s a low-tech side to it, too. Just as displaying signage about the surveillance cameras can deter customer shoplifting, it works for employees as well. You can post signs in break areas, lunchrooms, loading docks, warehouses, store front offices (where cash drawers are counted), employee restrooms—you name it. For this to work, though, you’ll have to make it clear to employees that the video footage is real, and that it is being regularly recorded and reviewed.
Sweetheart deals in all shapes and sizes
These thefts involve employees giving a customer (or another employee) free or reduced-priced merchandise in exchange for a favor, money, or some other hush-hush “compensation.” What’s important here isn’t the details of the arrangement between parties, but that your profit margins are taking a hit by loss of valuable merchandise.
Regardless of the employee’s motivation, sweetheart deals take many forms. The most obvious is a cashier simply undercharging (or not charging at all) for an item. Another is to charge for only part of a quantity purchase, perhaps “overlooking” three out of eight identical items. Or a cashier might knowingly not charge for bottom-of-basket items, even when the cameras tell them such items are present. Other tactics include unnecessarily marking down items as day-old, expired or damaged, or sometimes even intentionally denting cans or crushing boxes.
Video footage from your surveillance cameras on the store front and store back can help spot these deals after the fact. However, productivity reports on your cashiers can also help you spot patterns that might indicate activity suspicious enough to merit investigation, which can help prevent future thefts. For example, when a cashier’s product distribution consistently falls outside the averages for all cashiers, you might more closely review video footage while that cashier is on duty. Also, since many bottom-of-basket cameras can precisely identify items, you can obtain reports to correlate whether a cashier heeds or ignores the system’s alerts and rang up those items.
The case of the missing cash
It isn’t just merchandise theft that cuts into your grocery profit margins. Sometimes it is cash, plain and simple—or its electronic equivalent. Some of these thefts are easier to spot than others.
For example, let’s say a cashier’s drawer comes up short a little too often. That might indicate they need additional training on handling cash or counting change. But it could also mean they are embezzling funds, little by little, hoping no one will catch on. Another possibility is larceny, where an employee helps themselves to someone else’s till. Either way, employee productivity reports can spot and alert you to too-frequent shortages, then reviewing video recordings of both the cashier lanes and the front-end office can help you discover and stop the thefts, whoever is committing them.
There’s also check tampering, billing schemes, and false returns, though these are more often restricted to “back office” administrative clerks than cashiers or other store floor personnel. The best way to prevent these is by using systems that help automate your back-office audits and cashflow.
In summary, it’s important to remember that a hefty 30 percent of theft in retail grocery stores comes not from customers, but from employees. With the right retail technology solutions in place, though, you can reduce this significant drain on your profit margins.
Ready to find out how margin and loss management solutions can help you protect grocery profit margins from employee theft? Find out how TRUNO can help you get started right away.