Biggest Losses Are Caused by Employees. What Can Be Done?

Did you think that organized groups of thieves are the biggest security risk for retail stores? Think again! According to studies, the most common perpetrators of thefts in retail stores are employees themselves. So how do you protect yourself from thieves from your own ranks?

There aren’t many novice retailers that will open a store without first making sure that they have the tools required to deal with external theft. But a lot of the time, business owners don’t want to admit to themselves the ugly truth of their own employees stealing from them.

But it’s the employees who, according to the Global Retail Theft Barometer, are responsible for up to 39 % of all losses. External thieves are in second place with 38 % of all losses, while third place belongs to losses occurring inside the supply chain. Goods most likely to get stolen are quality food, cosmetics, and clothes.

Employees as Possible Reason for Bankruptcy

According to the American Chamber of Commerce, up to 75 % of employees will commit at least one theft in their lifetime and 37,5 % of them steal regularly. The most frequent thieves are employees in managerial positions. 3/4 of all employee theft is not detected and if it is, it takes employers 12 to 18 months on average to catch a stealing employee. During that time, the company can take a financial hit and in extreme cases even go bankrupt. In the USA, up to 1/3 of businesses goes bankrupt due to employee theft.

Internal thefts can be spontaneous or organized. Organized theft is usually committed by employees who are knowledgeable about internal processes and can cause a lot of damage. After direct theft of money or goods, the most common practices include intentionally not scanning goods during checkout or fictitiously accepting goods from the delivery service. Store owners are forced to deal with these situations using control processes and anti-theft tags applied to goods.

External thieves also use a variety of sophisticated methods to steal goods from stores. Smaller thefts are committed by the consumption of goods inside the store or switching up the packaging on expensive goods to make them cheaper. More complex practices include the application of custom barcodes over the original ones, double pockets or specially modified luggage designed to pass security gates, and strong magnets or tools for removing anti-theft tags.

Technology is the Solution

If the employer gets lucky, they can detect potential thieves during the recruitment process. But if they fail, there isn’t more effective prevention of internal and external theft than using surveillance systems. So which surveillance system should you invest in from the long-term perspective? Nowadays, business owners prefer user-friendly solutions. Well-arranged elements, quick access, and a mobile app are essential. More advanced surveillance systems also offer a variety of applications that will provide business owners with the maximum possible control over their stores.

“Smart video analytic tools are an essential part of the NetRex platform,” says Petr Kodytek, NetRex Product Manager. “They can considerably help with the fight against internal and external thieves alike. The SmartSearch function allows store owners to search for movement in a defined area–e.g., around frequently stolen goods. Apart from that, the platform can be connected with the cash register system and store owners can quickly search recordings connected with individual cash transactions. A whole lot of unethical activities can be unearthed using these tools.”

“Our smart Add-Ons help retailers with a variety of situations that can lead to losses caused by employees,” says David Capoušek, the founder of NetRex. “Add-Ons allow automatic sending or saving images from the camera on set times so the store manager can see if the goods are properly stocked etc. Other popular features include notifications regarding suspicious activity or the monitoring of opening hours using the security shutter. Every store is unique and we always try to find the correct solution for the specific needs of our clients. There are many ways to combine and apply our Add-Ons.”

And how do you deal with stealing?