The number one source of shrinkage

The Number One Source Of Shrinkage

Surveys suggest internal theft is responsible for the most shrinkage in a retail business. Its an area that doesn't receive a lot of attention in garden centres.


Snap73.jpgAccording to several retail security surveys, the number one source of shrinkage for a retail business is internal theft. In most garden centres theft usually amounts to an employee nicking something for home, or a private landscaping job; or having a finger in the till. In larger retail stores it can include discount abuse, refund abuse and even credit card abuse.

Unfortunately, this is one loss prevention area that generally doesn't receive as much monitoring as customer theft because most of us have huge respect for our employees. We feel that respect is returned through their loyalty and work ethic. Anyway, we don’t much like the thought of checking staff bags or continually working under the surveillance of security cameras and scanners.

There will always be people who can’t hold back the urge to steal from their employers. They do it for many reasons: to fund addictions, tough economic times or quite simply, they are presented with an opportunity and they can.

No-one relishes the thought of having to confront anyone they work alongside and voicing suspicions of theft. So do you have a loss prevention plan? What everyday measures can you take to reduce the possibility of theft?

  • All staff members, regardless of whether they are engaged full time or part time, should have written terms and conditions of employment which meet the employment laws of your country. These should be discussed during the hiring process and the employee should be fully briefed about the standards you expect on the first day they commence work.
  • Create a good working atmosphere. Contented employees are far less likely to want to cheat on their employer.
  • Offer staff members the opportunity to purchase at discount rates except on specials or mark downs because staff are an excellent source of promotion.
  • Have clear procedures about how staff purchases should be handled. A set time when they can pay for their purchases - either immediately after the garden centre closes each day or during a quiet time of day to save pressure on managers closing tills and cashing up at the end of the day.
  • No staff member should handle their own purchase.  A manager or assistant manager should always be present to oversee a purchase.
  • Uphold workplace standards and make it known that dishonesty or theft is not acceptable behaviour and offending staff will be disciplined
  • Develop written disciplinary rules and procedures and ensure all management and staff know what these are.

Owners / managers should be vigilant without being OTT. When you walk the garden centre, make a mental note of ‘what is where’ and keep an eye on your inward stock and sales reports daily. Keep an eye on stock being ‘put out the back’ for staff or staff ‘holds’ and in a friendly way, check that staff have paid for the items before they take them home.

If you see anything not quite right, don’t let it slide. Start talking about it amongst the staff so that it becomes obvious you want reasons why something is ‘out of place’, missing or sitting at the back door.

If you think there is an incident, consider introducing tighter security measures such as regular checks on stock and equipment and nightly till reconciliations

Most importantly, you must confirm your suspicions and find hard evidence if you think someone is stealing. Sometimes you have to be a little creative to do this but you put yourself in a difficult position if you confront someone without absolute proof. You should note too, that it can be unwise to announce that you are investigating suspected theft. Not only may it put all employees' backs up, but the culprit may take action to cover their crime.

Theft is a serious allegation and it is essential that the allegation and dismissal process follows basic procedural standards to ensure the individual is treated fairly. If you are unsure of what these should be, seek opinion from an employment law specialist. Failure to do so could result in a discrimination claim against you.

Never confront an employee without being sure of your facts or you risk leaving yourself open to legal claims. Don’t feel tempted to read emails either because you risk breaching data protection laws.

Sometimes when you are absolutely certain someone has stolen an item and the value is minor, you can take them aside, explain to them what you know, and without any accusation allow them to tell their side of the story. If they’ve got any sense they will realise they’ve been rumbled and that will probably be an end to it. 

Joy Lamb