How to reduce the risk of internal theft in the retail sector

Crime continues to be one of the biggest challenges the retail industry faces, with detrimental impacts felt not only by the businesses, but the retail workers who can find themselves subjected to intimidation, violence and abuse from perpetrators. According to The Guardian, the rate of shoplifting in England and Wales has hit its highest level for more than two decades after rising by nearly a third in a year.

Data from the Office for National Statistics revealed there were 402,482 shoplifting offences recorded by police in England and Wales in the 12 months up to September 2023, the first time the number has exceeded 400,000 since records began in 2002.

Whilst the Home Office is taking clear action on external offences through the publication of new Policy Papers created in response to the worsening situation, this does little to tackle the issue that retail businesses face from ‘internal’ threats.

What is internal theft?

Shoplifting and theft within the retail industry is usually derived from an external threat. However, employee theft continues to be a significant concern for the sector, contributing to huge losses for businesses annually. Internal theft occurs when employees of retail outlets or businesses steal money, products, or information from their employer. This leaves retail businesses with the ongoing risk that an individual working within a company could pose a threat, such as stealing cash or other goods.

What are examples of internal theft?

Employee theft can range from cash, merchandise or fraudulent activity (including fraudulent returns and refunds); however, the most common type of employee theft is monetary, and with retail businesses commonly dealing with cash, they prone to this type of theft.

According to research from Retail Economics and Thruvision, employees account for 40% of the value of theft across UK retailers. They also state that staff working in distribution centres and stores are responsible for the loss of £3.2bn.

What are the consequences of employee theft?

Employee theft can cause a huge amount of damage to a business. Financially, it will reduce profits. Furthermore, theft can also lead to a lack of trust among staff members leading to low morale within the team. Alongside this, employee theft can cause reputational damage, resulting in  loss of trust from customers, vendors and partners, which can be detrimental to a business.

How can internal theft be prevented?

There are a variety of ways that employers can protect their retail businesses from the risks of internal theft. These could include:

• Completing full and thorough backgrounds on new applicants

• Having clear policies and procedures in place

• Conducting employee training and awareness programmes

• Undertaking regular inventory audits

• Investing in enhanced surveillance technology

Benefits of background checking employees

The most preventative measure a retail employer can take to try and combat the risk of internal retail theft, is to undertake background checks on their applicants before the individual starts working there. Background checking is a standard procedure for almost all industries in the United Kingdom. Vetting your applicants not only ensures that they’re qualified for the position, but provides you with a ‘bigger picture’ of who the candidate really is and minimises your hiring risk.

Take a look below at the most used checks our clients within the retail industry undertake:​  

• 3 or 5 year employment history

• Digital Right to Work Checks

• UK DBS Checks

• Identity Checks

• Adverse Financial (Credit) Checks
  

With our background checking platform VettingGateway, we can support you in streamlining your in-house background checks to improve the quality of your new employees and help protect your business from theft, fraud or reputational damage. You’ll also benefit from our industry leading turnaround time of 2 days for employee reference checks, speeding up your time to hire which is particularly important during the seasonal fluctuations the retail sector faces. Find out more here.

If you would like to learn more about how you can use VettingGateway to make informed hiring decisions, please book a demo with a team member below.    

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