Are your retail audits targeting the right people? The United States Department of Defense discovered that one of their retail store managers had stolen more than $400,000 of merchandise over a period of two and a half years.
Regular retail security audits are an important tool in making sure that your stores are consistently locking up the merchandise that needs to be locked up, keeping the doors closed that need to be kept closed, and doing the best that they can to encourage a company culture of loss prevention. Using software can make the hard job of conducting a retail security audit a lot more straightforward. But are your audits asking the right questions, and are they asking them of the right people?
The bulk of the stolen merchandise consisted of sunglasses, handbags, and various electronics. The manager stole at least some of the merchandise by unloading it himself upon delivery, and arranging his own shifts to coincide with deliveries of high-value goods. He would then, with his spouse, sell the stolen inventory online. The items were logged in the store’s inventory records, and the discrepancy between actual in-stock merchandise and the inventory logs were only discovered upon auditing. The manager was caught after an anonymous tipster told the Department of Defense about the APO address in the manager’s spouse’s online store profile.
The lesson for retail auditors: make sure you keep half an eye on store management. While the majority of non-breakage related merchandise loss incidents are far more likely to be due to non-manager employee theft and customer theft, be aware that some managers will take advantage of their positions for personal gain. Because they have more access to store inventory records, they have the opportunity to steal merchandise that might not be detected or prevented by your current auditing practices, and are likely to get away with a lot more money (see pages 40-41 of the most recent ACFE report for more information on the relationship between company position and fraud prevalence / case value). As the Department of Defense report puts it, “[It is] important to remember that even the most trusted employees can commit fraud.”