The Fraud
The National Retail Foundation had the University of Florida do a study on the 2006 data for record theft and shoplifting losses of $40+ billion. The results broke down this way:
- Employee theft = 47%
- Shoplifting = 32%
- Administrative errors (pricing, etc.)= 14%
- Vendor fraud = 4%
- Unknown sources = 3%
So we can estimate the cost of shoplifting to retailers at around $13+ billion a year.
The Flaw
Lack of security controls. The subject of employee theft is covered in the first section of this module, but the major method retail employees use to accomplish theft in the context of grocery stores or large discount retail operations is by "sweethearting." That term refers to a checkout clerk, when processing an order for a friend, relative or accomplice, holding a hand over the bar code on a product being scanned so that no amount is rung up on the register.
This sleight of hand fools any security cameras into thinking the item was scanned properly.
Shoplifters themselves can be freelance amateurs, kleptomaniacs, or members of sophisticated professional bands who shoplift for a living. Some pros even take orders from local "fences" for specific items.
The Fix
- Closed circuit TV surveillance
- Employee training and Supervision
- Alarm devices attached to products (to be disarmed by cashiers)
- Security personnel (in uniform or plain clothes)
- Intelligent hiring practices
- Vigorous prosecution
. . . check "all of the above!"