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Staff theft and......Fighting Retail Crime >>
FIGHTING RETAIL CRIME was prepared by the CENTRE FOR RETAIL RESEARCH,
based on in-depth interviews with major retailers responsible for
more than 50% UK retail sales.
It argues that theft by store employees is much greater than has
hitherto been supposed. In addition to direct theft by staff, it
draws attention to collusion. Staff-related crime was responsible
for 50.8% of total store theft.
Results of previous research
contrast, in the USA staff theft is considered by retailers to be
much more costly than customer theft. The Hollinger, 2002 study
from the University of Florida reported that employees were responsible
for 60% of combined US staff/customer fraud.
Four-fifths of the security managers interviewed felt that the cost
of staff theft to their business was increasing more sharply than
customer theft. Security managers felt that a retailer's employees
handle cash and goods in order to do their work, they know the weaknesses
of the company's administrative systems, and they can recognise
(and may well be friendly with) supervisors, managers and security
staff whose role is to protect the company's assets. They argued
that this showed why detecting theft amongst employees was more
difficult than finding dishonest customers. It could not be used
to demonstrate that staff theft was rare.
Main methods of retail employee theft
The study examines some of the main methods used by store employees
to steal including wearing or carrying merchandise out of the store,
bogus refunds, taking cash from the till, grazing and loyalty card
Collusion with customer thieves
This was the first study of retailers which asked companies to
break down their perceived 'causes of loss' into collusion in addition
to staff and customer crime. Four-fifths of the security managers
interviewed felt that the impact on the business of collusion between
certain staff and customers was substantial. Supermarkets, department
stores, pharmacies, variety chains, clothing record shops and DIY
believed they were especially susceptible to collusion. Hence the
normal practice of calculating staff and customer theft as separate
totals may understate the involvement of staff in crime. They were
asked to estimate what proportion of customer theft was likely to
involve collusion. The result, weighted to reflect those retailers
who thought there was minimal or no collusion, showed that around
16% of customer theft in their businesses was thought to be linked
to staff collusion.
However the vast majority of staff were thought to be honest.
Estimated Crime Costs 1999
(source: derived from Retail Crime Survey
1999, London: British Retail Consortium and survey of security managers)
||Retail Costs by Cause
||Total Crime Costs
- staff crime
Table 1 shows the result of reworking the most recent BRC data
to take account of collusion. The total of collusion, £121 million,
is assumed to be suffered only by the major retailers surveyed.
Nevertheless, on the basis of this restricted assumption, staff-related
theft is seen to be £640 million or 50.8% of total retail theft,
roughly equivalent to customer theft. This is only a preliminary
exercise but it demonstrates the possible significance of collusion.
Main types of collusion
The main forms of collusion are discussed in the Report. They
included refund fraud, false markdowns, sweethearting ('discounts'
for friends and family), theft of loyalty card points from customers,
and other illegitimate use of discount entitlements.
Rational expectations about collusion
The survey showed a high level of consistency across the industry
about the need to recognise the importance of collusion to retail
profits. Most staff were regarded as being honest. The high market
share of respondent firms indicated that that if their perceptions
were accurate only for the companies studied then this would itself
indicate there was a large-scale national rate of collusion. Lastly,
there is an understanding based on a rational view of the criminal
that collusion is likely to be significant because it will normally
be safer than shoplifting or staff theft practised as separate autonomous
activities. Compared with conventional staff theft the employee
will not be found with goods or cash on his or her person. The customer
thief in collusive activity will have acted like a normal shopper
rather than a shoplifter and will be much less likely to attract
the suspicions of supervisors, managers, or security staff. This
apart, as collusion is a lower-risk activity than either staff or
customer theft, the rational criminal attempting to optimise gains
at low risk would be expected to desire a considerable level of
involvement in it.
Types of staff thief apprehended
80% of the sample of security managers the 'typical' staff thief
that they detected was usually someone who had been employed for
less than 12 months and was frequently a part timer. Detailed interviews
that most had carried out with staff thieves showed that thieves
usually admitted to starting to steal in the first few weeks of
their new job (sometimes being taught to steal by a co-worker) and
they would steal for about six months around which time they might
be caught. Someone stealing £40 per week would thus have stolen
£1,000 in 25 weeks. Retail businesses have low net profit margins
in comparison with other types of company. If a retailer achieved
a net profit margin of 3%, the business will need to sell £33,333
more goods in order to replace the £1,000 that has been stolen.
If the Company has 30 such thieves, it will need to sell £1 million
extra to replace the missing money. This is the reason why few retailers
view staff theft as a legitimate perk of the job.
It is possible that the reason why so many new employees were apprehended
for theft is that they were not very good at it. A new member of
staff may not have learned to overcome the behavioural clues often
given off by thieves, he or she may not know the systems well enough
to cheat effectively and may not have been accepted by the workgroup
which might otherwise cover up for the thief.
More experienced employees may be continuing to steal for many years.
Forty percent of the sample reported that one quarter or more of
their total staff apprehensions were management grade, supervisor,
senior administrator and security officer - the very people entrusted
with guarding the company's assets. They usually had unsupervised
access to most parts of the building at unsocial hours and were
able to steal, often in conjunction with associates, over many months
or years. Whilst the novice thief would steal between £1,000 and
£2,000, they felt that the more experienced and senior employees
would probably steal more than £10,000 over a much longer period.
Retail Loss Prevention The Report goes on to discuss the main trends
in retail loss prevention.
Two comments on the Report, Fighting Retail Crime
'Somebody had got to say this, it's a major problem we face...I
have been through the whole Report to check that my company has
got a policy for every one of the problems you identified.'
(Security director for major retailer)
'This Report is wholly without foundation.'
(Spokesman from Union of Shop, Distributive, and Allied Workers
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