Shrinking Holiday Season Shrinkage
Increased foot traffic during the holiday season also increases the potential for shrinkage or retail theft. Shrinkage, which represents about 1.44% of total sales for all retailers, and as much as 20% of total sales for individual retailers, is a serious matter that has a dramatic impact on profitability. While we would like to believe that it is the unscrupulous consumer who accounts for the majority of shrinkage, the bad news is that recent survey results indicate 43% of retail shrinkage,valued at $14.4 billion, is attributable to employee theft.
While employee theft takes a variety of forms, one of the largest areas of employee theft, and one of the most difficult practices to deter, involves intentional margin loss, or sweethearting. This practice, also called sweetheartening or sliding, occurs when a dishonest employee (DE) gives unauthorized discounts or only charges the customer (usually a friend or family member) for lower value items and places other product in the bag at no charge. Even a POS scanner can be manipulated. For example, a cashier can pass an item around a scanner or scan a barcode for a much less expensive item.
Sweethearting is a significant problem for retailers because it is the perfect crime of opportunity – it is easy to do, hard to detect and anyone with access to the cash register can do it. Typically, the value of a sweethearting case is higher than average DE theft cases, and it is very random in nature, making traditional exception reporting an ineffective solution to identifying the criminal activity and taking corrective action. Companies say that 18.7% of employee theft cases involve collusion between internal and external sources and it is estimated 60 – 80% of DE shrinkage occurs at front-end registers.
More employees are likely to engage in this form of theft because they have blurred the moral lines… to them it may be psychologically justifiable as “hooking up a friend with a discount,” but to the retailer, it fits the classic definition of a theft.
Studies show that shrinkage is consistently less in retail operations with reduced employee turnover and fewer part-time associates, but they also show if an employee gets away with unethical behavior one time, the action is more likely to be repeated.
Making inexpensive changes to your store queue management can dramatically decrease shrinkage attributable to sweethearting. Statisticians, economists and savvy retailers have known for decades that single line queue solutions (SLQ) at the check-out improve the customer experience, but this solution is also a loss prevention (LP) technique that is especially effective at combating sweethearting. Because customers wait in a single line, you remove the opportunity for them to select a specific cashier, dramatically reducing the potential that their assigned cashier will “sweetheart” them products.
For over 30 years, Lavi Industries professionals have developed industry-recognized expertise in developing single line queuing solutions customized to retail stores. Lavi offers a full suite of supporting products from eletronic queueing systems like the QtracCF Call Forward electronic queuing system and our new cloud-based QtracVR Virtual Queuing solution. Our crowd control products such as retractable barrier stanchions and signage are cost effective solutions that can be customized to your unique store operation. For a free consultation, call (888)285-8605 to speak to a retail specialist.