Consumer Nation

As Retail Crime Rises, Employees Are Often the Culprits

The fact that retail crime is on the rise may not be surprising given the tough economy, but a new study uncovers one surprising fact: employees, not shoplifters, are often the culprits.

In the 12 months ended June, shoplifting, employee theft and organized crime rose 6.6 percent globally from a year ago to $119 billion, according to the Global Retail Theft Barometer, a study underwritten by a grant from Checkpoint Systems , a company that offers labeling and other technologies to help prevent retail theft.

The increase pushed theft to its highest level since 2007, when the annual study was first conducted on a global basis.

In the U.S., the rate of theft is higher than it is in other countries, about 1.59 percent of total sales versus about 1.45 percent of total sales globally.

Who's doing the stealing differs across the globe. On a worldwide basis, employee theft and fraud accounted for 35 percent of the loss. Customer theft, including shoplifting and organized retail crime by gangs of criminals, accounted for 43.2 percent of the loss.

In the Western Hemisphere, however, employee theft outpaces shoplifting, the study found. In North America, employee theft accounted for 44.1 percent of the loss, and the average amount stolen by an employee was worth about 8-times that of a shoplifter.

Employees can steal from their employers in a variety of ways. They can steal cash from the register drawer or actual products for their own personal use or for resale. They can also steal in more subtle ways, such as giving friends and family unauthorized discounts.

According to Joshua Bamfield, director of the Centre for Retail Research and author of the study, U.S. retailers spent about $12 billion last year to prevent theft.

That of course, drives up the cost of products for everyone.

“Although there are commentators who view retail crime as a harmless or intriguing social phenomenon or simply as a cost of doing business, this ignores the impact of criminal gangs, growing levels of violence against employees and customers, and the links between retail crime and drugs, fraud and extortion,” Bamfield said.

The study found that retail crime cost families in the 43 countries that were studied an average of $200 on their shopping bill. But in the U.S., where consumers are wealthier and retail sales higher, the figure was $435.

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