According to The Global Retail Theft Barometer, an annual study researching retail shrink and theft across multiple countries, North American retailers have more employee theft than any other country or region in the world. Take into consideration the vast difference in the number of retailers in the United States versus Canada and one can conclude that employees in the United States steal more than any other country.
The study, conducted annually by The Centre for Retail Research, shows that retail shrink (the loss of inventory and goods) decreased across the globe in 2009 by almost 6 percent (5.6%) from the previous year. That being said, the cost of shrink loss was still a staggering $107.3 billion (U.S. dollars). North American retailers reported the highest reduction in shrink loss of 7 percent, which still accounted for losses over $42 billion (U.S. dollars) or 39.9% of the overall shrink loss in the global retail industry.
Here are some additional facts and figures related to employee theft from within the study.
North American dishonest employees made up 28 percent of the overall employee theft across the globe.
An average dishonest employee steals 10 times more than an average shoplifter ($1,944 versus $196).
Over 670,000 dishonest employees were apprehended in the United States in 2009.
Although shrink is down, the number of incidents (both internal and external) increased overall across the globe.
The University of Florida publishes a U.S. report on shrink each year known as the National Retail Security Survey. According to its 2009 National Retail Security Survey published this year, employee theft represents 43% of the total retail annual loss of over $33 billion, the highest contributor to overall retail loss. Costing the U.S. retail industry over $14 billion, the survey states that there is no other form of larceny that costs more than employee theft.
The results of both of these studies clearly show that employee theft in the United States is a major issue in the retail industry. And according the global landscape, employees from North America are apparently far more dishonest than anyone else in the world.
Is it possible that the reason North America has such high numbers of employee dishonesty is because we are better at apprehending them than our foreign retailers?
Having personal experience in working with U.S. and non-U.S. retailers, here are a couple of reasons why I believe North America shows signs of increased employee theft over other countries.
Technology: Although there are many technologies out there being used by loss prevention departments, the user of exception-based reporting (EBR) is still far greater in North America than anywhere else in the world. Well into its 2nd decade of use across North America, EBR systems are still in their early years of use across Europe and other countries.
Although grown in its use across many retail companies, the primary function of an EBR system is to analyze, detect and investigate point of sale issues and concerns. The focus of this analysis is primarily employee theft detection, and with great success, means an increase in the number of reported employee theft situations. With the majority of companies using EBR boasting a quality ROI, this tool alone can account for a substantial number of dishonest employees for a single retailer.
As other countries continue to adopt this tool into their LP toolkit, it will be most interesting to see if the statistics related to employee theft begin to change.
Employment Laws: The United States has a more liberal employment environment when it comes to investigating situations involving our employees. Compared to other countries, the U.S. allows a retailer to more easily investigate and terminate an employee for theft or work-related issues.
Employment laws or privacy restrictions often prevent our foreign counterparts from fully utilizing technology like EBR systems or camera systems to investigate employee theft (depending on the country). With these legal restrictions or lacking technological support, apprehending a dishonest employee can be more difficult. A loss prevention department without the ability to utilize certain data in their analysis, or restricted in their ability to interview a suspect is going to find it more difficult to apprehend employees. Take that ability away and it is natural to lose that desire to investigate these types of loss.
Turn the situation around. How do we think a U.S. loss prevention department would fair if their hands were “cuffed” by increased laws restricting the investigation of employee theft?
These are two reasons why I believe that the North America shows an increase in employee theft than our retail peers across the globe. Do you agree? Disagree? Have other reasons or ideas?
We want to hear your comments about this topic.
Written By David Johnston, Director