inventory shrinkage

Inside Job: 5 Steps to Detecting (and Preventing) Employee Theft

One of the sad realities of human life is that people do bad things. What leads to that fact and its various philosophical implications is something we'll leave to better minds to analyze. But for the thousands of merchants using Shopventory, this means having to deal with the unpleasant subject of both Customer and Employee theft...

5 Tips To Prevent Employee Theft

According to the National Retail Security Survey, employee theft costs U.S. retailers $16 billion every year. The New York Times spoke with Richard C. Hollinger, the University of Florida professor that put together the survey. He notes, "Once an employee is hired, they have keys and access codes. They're very hard to deter and very hard to catch."  Last week, we delved into inventory shrinkage and some ways small businesses can prevent shoplifting. Employee theft actually accounts for 42.7% of inventory shrinkage vs. shoplifting's 35.6% (Source), so we thought we'd share a couple of tactics to prevent and combat those pilferers within as well. Here are five quick tips to keeping your employees honest and your small business safe.6 TIPS

1. Hire the right people. We all want to think we're hiring the most trustworthy souls to help grow our businesses, but 75% of employees admit to stealing at least once from their employers... so chances are, it will happen eventually. Put obstacles in place during the hiring process to weed out potential problem people. Always check references. Consider drug tests (or simply mention drug testing) to avoid hiring someone who might be prone to stealing in order to support their habit. In addition to hiring the right people, provide some sort of ethics training and do your best to keep your best employees happy.

2. Never work alone. We fully support giving your employees the autonomy and confidence to rock and roll in their respective roles, but it's important to set up checks and balances to ensure they are consistently working within your business' standards. If you can afford to do so, pair up your employee shifts so that no one person is 100% responsible for cash, inventory or bookkeeping.

3. Set up cameras (or at least pretend cameras). Video surveillance in a warehouse or shop can be a deterrent, but can be expensive for a small business. If real video isn't possible, invest in a high-quality fake camera, but take that secret with you to the grave. Not even your store manager should know it's phony.

4. Ring up employee purchases yourself. Don't allow employees to ring up purchases for themselves, friends or family members. 

5. Drop by unannounced. You don't want to make your wonderful employees feel as if you don't trust them, but you do want them to know that you can drop in on them at any moment. Even if your surprise visits are to do something nice like bring your assistant some coffee, it's a simple way to check up.

Have you had to deal with employee theft in the past? Tell us your stories in the comments!

6 Simple Tips To Prevent Shoplifting

Inventory shrinkage breaks down to this: something that should be there isn't there anymore. Shrinkage cost the global retail industry more than $112 billion last year, which amounts to almost 1.4% of annual sales. This can happen for many reasons, including expirations, human error, damage and misplacement, but the biggest threat of all is theft (both employee theft and shoplifting). Shoplifting happens to small businesses just as easily as the big guys, but the difference is that 2% loss makes a much more serious impact on a small business.

Prevention is best, so we rounded up a few ways to fight those bad apples, prevent shoplifting and keep your inventory safe.


1. Design your shop with shoplifters in mind. Don't display pricey items near the door. Utilize mirrors to see around corners. Avoid creating "blind spots" with shelving and layout. Keep the shop organized so that you will recognize right away when something is missing.

2. Walk around. Engage. Make eye contact. This applies for customer service too, but simply be attentive. Don't be afraid to leave your assistant manager behind the register while you help a customer find what they need.

3. Recognize the signs. Thanks to Winona Ryder, we know that profiling a shoplifter is not going to work. Anybody (even a famous celebrity) has the potential to shoplift. And the majority of shoplifters are not so brazen that they just grab a big screen TV and run off. It's best to look for subtle things like anxious movements, big and baggy clothing (or unseasonable jackets), dressing room heists, customers who make frequent returns without a receipt, strollers without a baby, shopping bags that look old or aren't from nearby stores, umbrellas on sunny days, hangers and price tags on the floor, etc.

4. Understand how shoplifters will steal from your store. Basically, take note of the chinks in your armor when it comes to your layout and your inventory and take extra care in those areas. If you sell shoes, for example, make sure you confirm that the shoes in the box are the shoes on the box (and that there are no little surprises in the box or the shoes themselves). Or if you have only one shopkeeper working at a time, a shoplifter may ask for you to check if something is in stock and then walk out with something while you're in the back room digging around. Do you sell any of the most commonly stolen items like cigarettes, small electronics or designer clothing? You might need to shore up your defenses even more than the average retail business owner.

5. Have a plan in place for when you catch someone red-handed. Nothing is worse than spotting a shoplifter and then doing nothing out of fear or intimidation. Do you have a zero tolerance policy? What will you do if the shoplifter is under 18? How will your employees discreetly notify you of the situation in the moment? Create a protocol for you and your employees based on the laws and policies in your area.

6. Don't let suspicion rule you. Yes, shoplifting is a real problem, but treating your customers like criminals isn't going to do anyone any favors either.

Have any crime-fighting tips for dealing with shoplifters? Let us know in the comments!