December 9th, 2019 | Vincenza Caruso-Valente, General Manager, Retail and Staffing, Sterling
Best Practices for Counteracting Loss in the Retail Industry
It may be hard to believe, but the busiest season for the retail industry is very much upon us. Store hiring managers and HR teams are bringing on seasonal employees to prepare for the holiday season. With the considerable number of temporary employees being hired over a very short amount of time the chances of a bad hire slipping through the net can only increase, which in turn may impact the bottom line of your business. Whether this be from internal fraud, which has become more prevalent in the UK as highlighted by our internal fraud blog, to administrative errors, loss prevention has long been an issue for retail businesses.
The Retail Loss Numbers
According to a report published by Crime Tech, shrinkage is costing retailers more than €49 billion across Europe every year and when this is compared to total company turnover, this would represent the fourth largest retailer in Europe. Across the continent, the most common types of criminal causes of shrinkage include, shoplifting and internal fraud, which sees an increase in the sophistication of the crime which incorporates false voids, return fraud and deceptive loyalty cards.
The report further shines a light on the most ‘at-risk’ products across Europe when it comes to shoplifting, these are:
Food: alcoholic drinks, cheese, meat, sweets and canned
Apparel: accessories, knitwear, trousers and blouses
Electronics: mobile phones and accessories
Perhaps surprisingly, it was found that the UK alone, suffers more than any other European country, with a loss of more than £10bn every year due to soaring internal fraud. With the grocery sector bearing the brunt of shrinkage, taking a hit of £4.4bn in losses, this is followed by department stores at £2.1bn a year and trailed by apparel retailers at £783million.
Best Practices to Help Prevent Employee Theft
There are many manuals and websites explaining processes that retailers can follow to help prevent internal theft. Here are just a few of the tips:
- Background Screening: Retail stores should run background checks on their employees. Vend HQ recommends that employers get to know the applicant via interviews, be consistent and run the same background check process for every applicant and use a professional agency to conduct the checks.
- Monitor Gift Card Sales: Keep an eye on gift card sales reports and look for anything that seems extreme and above the average gift card sales totals.
- Procedure Training: Make sure cashiers know how to properly ring up sales, coupons and discounts.
- Bin Duty: Have two people on bin duty. Stashing items in the rubbish to collect later is one of the most common and easiest methods of employee theft. Also, use clear, plastic bags that can easily be checked.
The key to making these best practices work goes back to training the employee from their first day on the importance of deterring internal theft and the repercussions when it does happen.
Background Screening Policy
High turnover rates, tight time to hire demands, employee shrinkage, and customer risk are making hiring for retail tougher than ever. With so much competition and readily available positions, it is key for employers to be able to conduct background checks on their employees quickly and accurately, so new employees can get started and onboarded easily. Using the right technology for your employment background checks can affect how quickly you can get your new hire onboarded and started at their new job. Checks are also integral in mitigating the risk of hiring individuals with questionable backgrounds and may go some way to improving workplace safety and avoiding bad hires.
For cost-effective and comprehensive retail background checks that allow companies to meet the time-to-hire requirements learn more about our offerings for retail.
This publication is for informational purposes only and nothing contained in it should be construed as legal advice. We expressly disclaim any warranty or responsibility for damages arising out this information. We encourage you to consult with legal counsel regarding your specific needs. We do not undertake any duty to update previously posted materials.