Store Security: Shoplifting Prevention and Internal Theft

That's the kind of reaction I often encounter when discussing our shoplifting problems with co-op members, new staff and others unfamiliar with some of the "headaches" of retailing. But the unfortunate truth is that losses due to theft hurt co-ops every day. In fact, co-ops are sometimes seen as an easy mark by shoplifters. Many of those qualities that draw us to co-ops -- a more relaxed and trusting atmosphere, use of volunteers in store operations, and so on -- can leave us more vulnerable when opportunists appear on the scene. Other, all too common co-op features, such as a short supply of staff and workers overburdened with multiple responsibilities, increase this vulnerability further. While we needn't totally change our ways, taking adequate steps to prevent losses before they happen can save us hundreds of valuable dollars each year.

How badly does shoplifting hurt us? Consider this example: a customer steals a 59 cent candy bar from your co-op every day for one year. That $215 worth of merchandise out the door. If your store operates on a 2 percent profit margin (typical for a profitable co-op, according to the July-August 1989 issue of Cooperative Grocer), you would have to sell an additional $10,750 in merchandise just to make up for that 59 cent daily loss. Unfortunately, most losses due to theft don't stop at 59 cents per day. At that rate, we can't afford not to control these losses. The better we learn to manage them -- just as we manage spoilage, price shrink, bookkeeping errors and other types of shrinkage -- the tighter and more profitable we can become.

The unfortunate truth is that losses due to theft hurt co-ops every day. In fact, co-ops are sometimes seen as an easy mark by shoplifters.

Who shoplifts?

Unfortunately, there's no simple answer to that question. Statistics gathered in the retail industry give us some idea who is most likely to steal, but provide no definitive answers. Almost half of those apprehended for shoplifting are under the age of 18. Another 35 percent are 18-35, and the rest are over 35. Slightly more men than women are caught, and slightly more employed than unemployed. (Statistics from The Peter Berlin Report on Shrinkage Control, Store Manager's Edition, February 1989.) An overwhelming majority are amateurs who steal on impulse, and most admit that one successful shoplifting experience leads to a repeat. "Transients" who pass through your doors may be more inclined to steal out of apparent need. And while it may not be common, professional shoplifters could hit your co-op, looking for items them can quickly unload on a local fence.

Your co-op's staff should be trained to observe all customers, not just those that meet a "typical shoplifter" stereotype. Most co-ops have horror stories involving "typical customers." Here are a few examples, taken from our experience at Cass Corridor and other co-ops around the country:

• A helpful, friendly college student is caught leaving the store with a backpack full of groceries after paying for the few items he had in his basket.
• A well off working member is apprehended after stealing several boxes of groceries per week for several months. Her trick? She volunteered at the floor staffs shift change time each week. After assembling her groceries on the first shift, she would do her volunteer work, claiming she would pay for her groceries after she worked. After her shift, she would pick up her groceries and go, while staff assumed she had paid for them earlier.
• A customer brings a plastic tub full of peanuts to the register. She is apprehended outside the store with a pound or more of imported cashews (at over $5.00/lb.) under a layer of peanuts (under $2.00/lb.). Store staff suspected this was part of her regular shopping routine long before they were actually able to catch her in the act.
• A board member, known for his friendly manner and helpful spirit, comes into the store occasionally during busy times to help out. He is caught one night with a backpack full of unpurchased groceries an hour or more after the last register has been shut down. Again, store staff suspected a problem here long before the suspect was stopped.
• An unfamiliar shopper comes into the store one afternoon to return three tubes of toothpaste. He can't produce a receipt, but the floor manager gives him the benefit of a doubt and refunds his cash. The next day, the same shopper is back with three more tubes of toothpaste to return. Because the floor manager had communicated the previous day's unusual return to the rest of the staff, this second attempt to return the toothpaste, almost certainly stolen from the store in the first place, is refused. The manager suggests that perhaps she could "hold" the toothpaste for him until he can find his receipt.
• A store employee, feeling overworked and underpaid, decides that it really won't hurt the store that much if she eats a bag of chips or a sandwich each day without paying. With all the money that comes in through that cash register, how could a few dollars hurt anything?
• A group of local dealers discover that stealing butter and nuts from the co-op is easy business --they arrive at a busy time and create a little confusion while one of them makes off with the goods. The bar up the street advertises "butter, $1.00/ lb." It takes persistent monitoring, police support and a little luck to finally catch them in the act. Prosecuting the ringleader and moving the store put an end to the problem.

Your co-op needn't become a hotbed of suspicion and mistrust in order to prevent such incidents from happening. Establishing uniformly enforced policies and procedures, reviewing your floor plan, and making simple changes in the way you conduct business can go a long way toward preventing theft before it happens.

Preventive training

The best deterrent for shoplifting is an alert, well trained staff. Your local police department, Chamber of Commerce or retailer's association may be able to provide you with a training program as well as written materials on theft prevention at little or no cost. In the absence of a trainer, a video or filmstrip may provide you with basic information and help you begin to examine your own situation. Make shoplifting prevention a part of your regular orientation for all new staff. The Small Business Administration publishes a number of helpful handouts on theft prevention for use by store staff. Use these to increase awareness.

When it comes to dealing with shoplifters, an ounce of prevention is worth far more than a pound of cure.

Make your co-op's staff aware of the financial impact of shoplifting on your store, the members, and themselves. Many people are shocked at the impact that small losses, happening on a regular basis, can have on your co-op's bottom line.

Make policies and procedures and the reasons for them clear. Develop policies regarding where staff and working members can keep their bags or packs while shopping. Require receipts and management approval for refunds and returns. Stagger shift changes. Require receipts for all goods purchased by staff and working members, and make sure all workers leave through the front door. Have cashiers spot check bulk foods presented in opaque containers to reduce fraudulent purchases. Keep your store's floor adequately staffed, even if it means some extra expense or the rearrangement of some responsibilities. Plan in advance who does what or who notifies whom in case a problem does occur. Such guidelines, properly followed, could have reduced or prevented virtually all of the examples mentioned earlier.

Spend some time reviewing your co-op's floor plan. Wherever possible, eliminate long, unbroken aisles or displays, and dead ends or alcoves. These all afford the potential shoplifter protection. Stock expensive items, such as juicers, and theft prone merchandise, such as body care items, wbere they can be observed and away from exits. If possible, design or redesign your plan to include one common entrance and exit. Block off all unused checkouts, and alarm all unlocked fire or service exits. Keeping all displays neat, fronted and continuous, besides being good merchandising, makes big losses easier to detect.

Purchase and learn how to use devices which aid observation and protection. Place mirrors at strategic spots that help monitor hard to see areas. Make sure cashiers have a way to notify office or floor personnel in the event of a problem - a buzzer system may be enough.

Finally, make your stance on prosecution clear. Post notices that shoplifting won't be tolerated, and prosecute or make use of community restitution programs whenever you have the opportunity. Shoplifting isn't a victimless crime. While the criminal justice system is far from perfect, it is one of the few means we have to hold people accountable for their actions. Developing a tougher image can help reduce theft at a store that once had a reputation as an easy mark.

What if we catch someone?

In most cases, you must wait until a suspected shoplifter has passed your cash register or through your door before s/he can be questioned. At that point, questions such as, "Do you have anything else you'd like to pay for?" rather than direct accusations may be more productive and less inflammatory.

Know the laws in your state regarding the apprehension and prosecution of shoplifters. You generally must be able to testify that you saw someone take the merchandise with intent to steal, prove that it came from your store, and prove that it left unpaid for in order to successfully press charges. Different state laws afford retailers varying degrees of protection against charges of false arrest. Your local police department, a lawyer or some other resource should be able to provide you with this information.

The task of catching and holding a suspected shoplifter until the police arrive is not an easy one. Learn how to work in pairs and use good judgment. Don't endanger your safety or that of your co-workers. Better to have someone get away than to have someone get hurt. Know how to give a good description when talking with the police, beginning with sex, race, height and weight, and continuing with clothing, facial hair, scars and other characteristics. Practice these skills to keep them fresh. Know how to follow up on an arrest made at your co-op and how to follow through and prosecute.

When it comes to dealing with shoplifters, an ounce of prevention is worth far more than a pound of cure. That $215 of lost profit discussed earlier could go a long way to starting a program to prevent losses at any co-op. In a business that thrives on customer loyalty, the shoplifter is a repeat customer we don't want to encourage. Like our good customers, they'll be back again if they get what they came for. And that's exactly what we want to prevent.

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Store Security, Part 2:

Dealing with Internal Theft

Shrinkage problems weren't unusual at Cass Corridor Food Co-op in my eight years there. Our urban location, poor store layout, and inexperienced staff made us easy prey for both petty thieves and experts.

We thought we had left some of those problems behind in 1986 when we moved to a new location, reset the store, and began to reduce staff turnover. But in September of 1988, shrinkage problems turned up once again. After five consecutive profitable quarters, our margin plummeted to 23 percent, and our losses totaled over $9,000. I was shocked and dismayed when, after a month of investigation, all evidence pointed in the direction of theft by a member of our staff. The lost funds were never recovered.

In the year that followed, I talked with managers and staff of numerous other stores, and found that we weren't alone. Virtually all of them had encountered internal theft in some form or, more commonly, had suspicions of such problems that they were reluctant to confront.

Co-ops often create an environment for theft through a belief that relaxed cash handling and inventory controls are acceptable, and that careful cash monitoring speaks of mistrust and an "uncooperative attitude." My own experience taught me the hard way that just the opposite is true. Internal systems that incorporate good cash controls, clear policies, and good training and supervision for all employees will make your store less theft prone, and actually create a much more legitimate atmosphere of trust.

"But we balance our cash drawer every day . . . how could someone get away with stealing?" My conversations with other store managers revealed some interesting and clever ways to do it. Abuses of unmonitored void and refund keys are common. Some employees have rung cash sales in the training mode, which does not affect the daily total. Overringing sales and pocketing the difference, failure to ring cash transactons, unmonitored access to the store's safe, are all tried and true methods.

Ninety percent of employee theft in retail stores involves cash, not goods. Whle newer staff are found to be offenders the most often, it is not unheard of to find evidence of theft by senior employees. This is especially true when an individual has suffered an adverse change in life circumstances, which creates greater economic pressures. People paid low wages for hard work, a common situation in co-ops, sometimes feel they are "owed more."

Preventive measures

No matter what the motive, employee theft can be costly, especially if controls have to be put in place to stop it after it is already in progress. To prevent internal theft, store systems should include the following:

• Good initial screening systems, which include verification of past employment and checking of all references.
• Careful and thorough training for new employees, and routine monitoring and testing thereafter. Testing might include use of a periodic written quiz, and the use of "test baskets," which indicate an employee's accuracy and integrity.
• Individual cash drawers for all employees, with daily balancing procedures. Drawer sharing should be minimized or eliminated. This makes it easier to identify the source of a problem if it does occur, and gives everyone more incentive to do well.
• Management sign offs on all voids, refunds, and bottle deposits refunds over $3.00. Use of refund slips signed by the customer stating reason for refund. Monitored use of "no sale" key. These all prevent large scale abuse of these possible "pay outs."
• Regular inspection of register journal tapes to look for irregularities or problems. By piecing together a pattern of void and refund abuses, I was able to get to the bottom of our trouble at Cass. These tapes also can provide information on chronic misrings that may be costing your co-op money.
• Limiting access to the safe to a small number of employees.
• Review of all correction documents sent by the bank, comparing individual deposits with register closing or sumary sheets, looking for discrepancies between money taken in and actual amounts deposited.
• Requiring that each customer be given a receipt no matter how small the purchase, to insure that each sale is being rung up.

Good control systems, coupled with good recordkeeping and documentation, can provide valuable evidence in dismissing any offenders, and in any legal action you decide to pursue. Lack of good documentation can leave you liable for wrongful dismissal and makes it impossible for you to recover damages when prosecuting. One co-op I spoke with was only able to recover $700 of the approximately $7,000 it had lost; Cass was unable to recover any funds at all.

To prevent loss of store goods through employee theft, store policies should:

• Provide all employees with regular meal breaks. Prohibit eating on the job.
• Require that all employee purchases go through the cash register, and that recepits be attached to all purchases.
• Insist that all staff enter and exit through the front door.

Preventive measures yield results

When we tightened up our internal systems at Cass, I was afraid that people would feel less trusted as a result. Instead, I found that most employees were relieved to have mechanisms in place that called for more routine accountablity. The new systems made it much clearer who was doing a careful, accurate job and gave all employees added opportunity to take pride in a job well done. Not only did our big cash losses disappear, but our standard of what were "normal" and acceptable losses changed. Daily cash shorts of more than a dollar became much less common, and a new standard of accuracy was achieved, along with an improvement in staff morale.

Controlling shrinkage is a key to profitability no store can afford to ignore. It is especially painful to deal with employee theft after it occurs. By taking time to review your own systems now, you could save your co-op a lot of money and grief in the future. Once again, an ounce of prevention is much better than a pound of cure.