Tips to Prevent Retail Employee Theft

When it comes to combating loss prevention, many retail businesses focus the majority of their efforts on identifying and stopping shoplifters. From high-tech security cameras to Electronic Article Surveillance, retailers across the U.S. spend billions every year on trying to prevent shrinkage—yet they sometimes neglect a hidden internal threat.

Employee theft is just as bad—if not worse—than shoplifting. These sticky-handed employees often perform their work unsupervised while loss prevention focuses on monitoring the shoppers. A recent study conducted by the National Retail Federation found that shoplifters account for 36.5 percent of inventory shrink while employee theft accounts for a whopping 30 percent.

It’s important for retail stores to implement strong company policies that will help combat and prevent employee theft. Here are five things that retail businesses can do to stop or discourage internal shrinkage:


Education is the first line of defense against internal theft. Retail businesses should create (or purchase) a shrinkage training program which will increase internal awareness. This includes examples of what theft is (e.g., giving a friend or family member a discount), how to anonymously report incidents, and the consequences of being caught.

Management should also be trained on how to spot theft and have a clear understanding of the store policies, procedures and actions that they need to take. Each manager and employee should be required to sign and date that they have gone through the course or read the materials.

Management Awareness

Employee theft most often happens when management lets their guard down. It’s far too easy to get into a comfortable day-to-day routine and neglect to pay attention to certain warning signs such as:

  • Drug or alcohol abuse.
  • Working late.
  • Sudden devotion to work.
  • Objections to procedural finance changes.
  • Lifestyles above and beyond salary levels.

It’s best to train your managers to keep an eye out for these and other signs that could indicate one or more employees are stealing from the store. A careful check and balance system will help ensure that more than one person is looking out for internal theft.

Trash Buddy System

Taking out the trash or compacting cardboard boxes often requires employees to work in the back of the store where there usually aren’t any cameras. It’s far too easy for someone to swipe an item, put it in the trash, then return to the dumpster after the store closes.

Randomly assign two employees to take out the trash. If one of them has intentions of stealing, it makes it much harder if a second set of eyeballs are nearby. This buddy system also helps keep employees personally safe when they venture out into the alley behind the store.

Retail POS System

Investing in a good retail POS system will help reduce shrinkage as they can track inventory and sales. It also provides a record of who was working the register at any given point in time. This can help managers or store owners track down any discrepancies.

A good POS system will also have an audit function, where it will keep track of such issues as price or inventory changes, login failures, employee discounts, and voided sales. Some of these systems use intelligent algorithms to alert managers and corporate when a set of conditions arise that could indicate internal theft.

Invest in a Smart Safe

A smart safe, such as the CashWizard from AMSEC, can help protect the bundles of cash that retailers take in daily. Managers and store owners can see when employees log in and the actions they took. This can help eliminate human error, theft, and reduce the number of times employees handle cash.

It will also perform many manual tasks that could otherwise increase the risk of internal theft. This can help free up the time employees, and managers spend dealing with cash and allow them to focus on running the business.

Reducing the Internal Employee Theft Threat

Employee theft is a huge threat that can undermine the profitability of a business. By taking proactive actions and having the right training and systems in place, such as a smart safe, retailers can help reduce their overall annual shrinkage by a large margin.

If you’d like to learn more about CashWizard smart safes and how they can not only help protect your cash, but free up valuable employee and management time, visit our website or give us a call at (951) 685-9680.