The State of the Loss Prevention Industry: 2010 Update

We recently completed our 22nd Annual Retail Theft Survey with 25 major retail companies participating, representing 18,906 stores, with retail sales exceeding $605 billion (2009). The survey participants were all large retail companies who practice true loss prevention strategies, yet they still apprehended over 1 million shoplifters and dishonest employees in 2009, and recovered more than $163 million from those apprehensions. [Download the 22nd annual report, PDF file]

For the fourth consecutive year, the total shoplifter and dishonest employee apprehensions increased substantially. Shoplifting apprehensions increased an amazing 16.8%, while recovery dollars from those apprehensions increased just 1.0%. The apprehension of and recovery dollars from dishonest employees decreased for the first time in six years, falling 9.3% and 15.7% respectively.

While shoplifting was up and employee theft down, the numbers continue to amaze us as these thieves stole over $6 billion in 2009 from our 25 surveyed retailers.

Below are some of the highlights from our 22nd Annual Retail Theft Survey:

Shoplifting

  • Apprehensions: Survey participants apprehended 1,014,817 shoplifters in 2009, an increase of 16.8% from the prior year.
  • Recovery Dollars: For the 9th straight year, dollars recovered from shoplifting apprehensions increased. In 2009, dollar recoveries were in excess of $111 million, a slight increase of 1.0% over 2008's recovery dollars.
  • For the 13th consecutive year, dollars recovered from shoplifters where no apprehension was made ($29 million) increased. In 2009, this increase was 19.35%.
  • The average shoplifting case value in 2009 was $110.14, which was a decrease of 13.52% over 2008's average case value ($127.37).

Employee Theft

  • One out of every 28.4 employees was apprehended for theft from their employer is 2009. (Based on comparison data of over 2.9 million employees.)
  • Apprehensions: Survey participants apprehended 70,409 dishonest employees in 2009, a decrease of 9.35%.
  • Recovery Dollars: Dollars recovered from dishonest employee apprehensions totaled over $51.3 million in 2009, a decrease of 15.71%.
  • The average dishonest employee case value in 2009 was $728.90, a 7.0% decrease over 2008's average case value ($783.88).

We asked our survey participants what they thought was the cause(s) behind the increase in shoplifting apprehensions and recovery dollars in 2009 and they contributed the following to increased shoplifting activity:

  • Struggling economy is causing more people to shoplift
  • Fewer employees on the sales floor creates more shoplifting opportunities
  • Organized Retail Crime (ORC) activity continues to increase
  • LP personnel focusing on high shrink areas and merchandise
  • Reduced social stigma of shoplifting

We also asked our survey participants what they thought was the cause(s) behind the decrease in employee theft apprehensions and recovery dollars in 2009, and they contributed the following to decreased employee theft activity:

  • More employee loyalty; employees afraid to lose their job in a poor economy
  • Better/enhanced pre-employment screening
  • More focus on prevention instead of detection
  • Turnover down and fewer overall employees
  • Less seasonal hires

With a continued increase in shoplifting activity (shoplifting apprehensions and recovery dollars up 4 years in a row) companies need to be more proactive with their anti-shoplifting program.

Areas companies can focus on to reduce their shoplifting losses include:

  • Customer Service: The best deterrent to shoplifting is good old customer service. Shoplifters want and need privacy to commit their theft acts; good customer service takes that away from them. If a customer states they are "just looking", tell them you will "keep your eye on them" in case they need any assistance.
  • Training & Awareness: Both new-hires and current employees need continuous training on shoplifting prevention and what to do if they observe someone shoplifting.
  • Physical Security Deterrents: If you have a shoplifting problem, physical security deterrents such as E.A.S. (Electronic Article Surveillance) systems and CCTV work when they are managed properly.
  • Source Tagging: Continue to pursue EAS source tagging of high value and highly desirable items with vendors and manufacturers.
  • Work with state and national retail trade associations for legislation to combat Organized Retail Crime (ORC).

Although dishonest employee apprehensions and recovery dollars were down in 2009, this area continues to be a major drain on many companies' bottom-line profits. Areas companies can focus on to reduce their vulnerability to employee theft 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 are 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/shrinkage control 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, retail theft (shoplifting and dishonest employee) is a much greater problem than many people realize, which forces higher prices on the consumer, and stores or even companies to close due to the profit drain from these losses. It appears the sluggish economy is causing greater levels of shoplifting which we see no reprieve from in the near future.

About the author: Mark R. Doyle, is President of Jack L. Hayes International, Inc., and has 25 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

  • 25 Large Retail Companies
  • 189906 Stores (representing an excellent cross-section of the United States)
  • $605,076,908,729 in Annual Retail Sales (2009)

Loading