Employee Theft Increasing By 15%
According to the most recent NRF Loss Prevention Survey, businesses lost $41.6 billion in 2006 to theft and fraud. That’s about 1.61% of sales lost to theft-related shrink. Many experts are reporting that employee theft is increasing by 15% per year on average. The NRF survey also found that $19.5 billion, or 47% of these losses, were due to employee theft and fraud. If the 15% holds true, we should see that losses caused by employees will hit about $22.4 billion for 2007.
Most experts agree that approximately 30% of employees steal from their employers. 75% of those do it repeatedly. The average time it takes to catch an employee who steals is 18 months.
Just to give you an example, I had a case a few years ago where, after an investigation, I caught an employee in the act of taking merchandise out the back door. The employee then admitted to me that he had taken approximately $78,000.00 in merchandise. When that store took physical inventory, the losses were estimated to be more like $150,000.00. The employee stated that he had been stealing from the store for approximately a year. By the way, he was a trusted manager, who had keys, an alarm code, etc.
What does this all mean? It means that retailers, who are now suffering by and large from soft sales and increased costs, must be even more dilligent in their efforts to deter theft and fraud, and to recover losses whenever they do occur. This war is fought one battle at a time, and on many fronts. Loss prevention has to adapt quickly to the changing economic climate, and develop solutions to new theft methods. Also, awareness levels have to be raised through training, coaching, practical exercises, etc. Employees must share ownership of the shrink in their stores, and not just view it as LP’s problem. Programs that educate employees about shrink and recognize those who help deter theft work best.
There is a lot at stake. $22 billion dollars is an astonomical figure that most of us can’t even really grasp. However, we can grasp our own losses, and we all know that those losses cost us dearly in profits.
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Originally published at The Bunker Blog. Please leave any comments there.