The State of the Loss Prevention Industry: 2009 Update

We recently completed our 21st Annual Retail Theft Survey, and for the third consecutive year the apprehensions and recovery dollars from both shoplifters and dishonest employees increased substantially. Shoplifting apprehensions increased 7.65 percent, while recovery dollars from those apprehensions increased an amazing 30.24 percent!

While employee theft apprehensions increased just over 3 percent, the recovery dollars from those apprehended dishonest employees increased almost 10 percent. The numbers continue to amaze us as shoplifters and dishonest employees stole over $6 billion in 2008 from our surveyed retailers.

The 21st Annual Retail Theft Survey covers 22 major retail companies, representing 19,151 stores, with 2008 retail sales exceeding $571 billion. The survey participants were all large retail companies who practice true loss prevention strategies, yet they still apprehended 904,226 shoplifters and dishonest employees in 2008, and recovered more than $182 million from those apprehensions, an increase of 7.26 percent and 21.64 percent respectively.

Below are some of the highlights from our 21st Annual Retail Theft Survey:

Shoplifting

  • In 2008, survey participants apprehended 832,106 shoplifters, an increase of 7.65% from the prior year.
  • For the 8th straight year, dollars recovered from shoplifting apprehensions increased. In 2008, dollar recoveries were in excess of $113 million, an incredible increase of 30.24% over 2007's recovery dollars.
  • For the 12th consecutive year, dollars recovered from shoplifters where no apprehension was made ($37 million) increased. In 2008, this increase was 9.08%.
  • The average shoplifting case value in 2008 was $135.81, which was a significant increase of 20.99% over 2007's average case value ($112.25).

Employee Theft

  • One out of every 30 employees was apprehended for theft from their employer is 2008. (Based on comparison data of over 2.1 million employees.)
  • In 2008, survey participants apprehended 72,120 dishonest employees, an increase of 3.01%. This was the 5th straight year of employee apprehension increases.
  • Dollars recovered from dishonest employee apprehensions totaled over $69.8 million in 2008, a substantial increase of 9.90%. This was the 5th straight year that dishonest employee recovery dollars increased.
  • The average dishonest employee case value in 2008 was $969.14, a 6.7% increase over 2007's average case value ($908.33).

We asked our survey participants what they thought was the cause(s) behind the increase in shoplifting apprehensions and recovery dollars in 2008 and they contributed the following to increased shoplifting activity:

  • Down economy is causing more shoplifting to take place
  • Organized Retail Crime (ORC) activity continues to increase
  • Reduced staffing on sales floor creating more shoplifting opportunities
  • High priced merchandise and ease of selling stolen items
  • Reduced social stigma of shoplifting

We also asked or survey participants what they thought was the cause(s) behind the increase in employee theft apprehensions and recovery dollars in 2008, and they contributed the following to increased employee theft activity:

  • Enhancements in POS Exception reporting systems
  • Less management supervision over employees
  • More employees are stealing in the poor economy
  • Quality of investigations and interview process (LP training increased)
  • More focus placed on internal theft cases

With shoplifting apprehensions and recovery dollars up substantially for the 3rd year in a row, companies need to be more proactive with their anti-shoplifting program. Areas companies need to focus on include:

  • Customer Service: Shoplifters want and need privacy to commit their thefts; good customer service takes that away from them. If they are "just looking", tell them you will "keep your eye on them" in case they need any assistance.
  • Training & Awareness: Train employees and staff on a regular basis in the area of shoplifting prevention.
  • Physical Security Deterrents: Investments in physical security deterrents such as E.A.S. (Electronic Article Surveillance) systems and CCTV work if they are managed properly.
  • Source Tagging: Continue to pursue EAS source tagging of high value and highly desirable items with vendors and manufacturers.
  • Working Together: Working with retail trade associations and the Federal Government for legislation to combat Organized Retail Crime (ORC).


With employee theft apprehensions and recovery dollars up for the 4th year in a row, preventative areas companies need to focus on include:

  • Pre-Employment Screening Process: The first step to controlling employee theft starts at the point-of-hire; do not hire the "bad apple". A thorough pre-employment screening process including, reference checks, "honesty testing", SSN trace/verification, criminal background checks and drug testing is most important. Money spent up-front in the screening process to identify 'quality' employees will result in savings from reduced turnover and losses.
  • POS Exception Monitoring: Use a POS exception based monitoring program to quickly identify possible fraudulent transactions at the point of sale.
  • Auditing: Ensure consistent compliance to company policies and procedures by conducting loss prevention/shrink audits on a regular basis. By reducing the opportunity, you reduce the chance of theft/loss.
  • Training & Awareness: Invest in loss prevention training and awareness programs for all employees, and a reward program for employees who report dishonest activities.

In summary, the seriousness of retail theft is a much greater problem than many people realize. With the downturn in the economy, we have seen an increase in theft, which is having a detrimental impact on retailers' bottom-line profits. These theft losses drive consumer prices higher and can force unprofitable stores to close.

About the author: Mark R. Doyle, is President of Jack L. Hayes International, Inc., and has more than 20 years experience in the loss prevention field. He has consulted with some of the finest retail, wholesale and manufacturing companies in the world. Hayes International, Inc. has been in the Loss Prevention/Shrinkage Control consulting business for over 30 years, and is recognized on an international level as the foremost loss prevention and inventory shrinkage control consulting firm in the world.

SURVEY PARTICIPANTS

  • 22 Large Retail Companies
  • 19,151 Stores (representing an excellent cross-section of the United States)
  • $571,906,927,011 in Annual Retail Sales (2008)

 

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