Remember when the term “sweetheart” meant something endearing such as a true fondness for another person? As with many words in the English language, “sweetheart” has multiple meanings, one of which retailers and loss prevention professionals do not find very endearing.
For loss prevention professionals, sweet-hearting is essentially giving (or aiding) a “customer” in the receipt of (additional) items without receiving full payment. Sweet-hearting can also cross over to refund fraud either in the form of a “customer” not bringing in merchandise, but receiving a refund from their friend or family member who is your associate or by a “customer” returning merchandise they received through a sweet-heart deal and receiving a full cash refund.
We know that employee theft is the largest contributor to loss in the retail industry. Some believe sweet-hearting is the most common type of employee theft; however, it is not often a statistic that has been tracked within the industry. The most recent National Retail Security Survey, published in October 2011, provided first-time statistics pertaining to collusion theft involving employees and outsiders. This study stated 96% of companies (out of 140 retail companies reporting) reported some incident of internal theft via collusion with a non-employee of the company. Based on all internal cases reported, slightly over 18% involved collusion with an non-employee. Furthermore, when asked if this represented an increase or a decrease, over 70% of the respondents believe that they have seen an increase in collusion theft.
Sweet-hearting can be difficult to detect. With this in mind, how much effort or concentration should be put on detecting/catching sweet-heart deals?
Common practices to detect and deter sweet-hearting include use of CCTV surveillance cameras and store associates checking customer receipts at exits. There are also some additional technologies available that use video recognition and scanning analysis to detect items that are seen going through the checkout, but not scanned into the register. While these methods are effective, they also have a financial impact (cost) on the business, which some retailers cannot afford. These tools require both a financial investment in the technology, as well as an investment in staff. Even if you have a state of the art CCTV system, do you have someone to routinely review or monitor the footage to identify dishonest behaviors? For most, the answer is a resounding “no”.
So, what can be done to deter, detect, and combat behaviors such as Sweet-hearting?
How much effort should be put into this type of theft?
Unfortunately, this type of theft is a circle of uncertainty. Unfortunately, the recent NRSS study was the first time this type of theft was statistically captured. Without historical statistics we do not exactly how large of a problem this type of theft is, and therefore it is difficult to know how much effort should be invested to stop or catch it. Without the investing the time and procedures to identify and record these occurrences, it is difficult to know how much time, energy, and other resources should be allocated to this type of dishonest behavior.
We know that with no means to identify, deter, or stop sweet-hearting, there is an automatic impact on shrink. However, since we don’t know exactly, or even theoretically, what that impact is in dollars, it is difficult to know whether the expenditure and ultimate reduction in shrink/increase in profits outweighs the expense.
How each retailer answers the above questions will differ since each situation is unique. Some will have historical data (closed theft cases), which shows a substantiating amount of theft. Others may have the financial and human resources to implement technology to prevent, deter and apprehend this method of theft.
There are, however, some behaviors that every retailer can watch for to assist in the detection of potential sweet-hearting. These behaviors occur with associates within a store and can help determine your risk level in this type of theft. Key behaviors to watch for include:
Family and/or friends of associates who are often in the store
Associates who spend more time assisting their friends and family while they shop than they spend with “anonymous” or “unknown” customers
Customers who ask for a specific associate and do not shop or purchase unless that particular associate is available to assist them (this is a common practice in some commission based environments, but should still be monitored even if it is considered common practice)
Associates who glance around at other associates and management while ringing on the register
The sales performance of each associate; monitor sales dollars, units per transaction, average sale time and other sales related activities. Cashiers with lower percentages but considerable time on the register may indicate potential sweet-hearting or ringing issues.
Recognizing behaviors such as these may help answer the questions of both, “how big is my problem?” as well as “should I invest (and how much) in resolving this problem?”
Shannon Hill, CFI, National Client Services Manager