In the 2004 National Retail Security Survey by the University of Florida, retail shrink accounted for 1.54% of annual retail sales for large retailers—and for up to three times as much for small- and medium-sized retailers. A study from AMR Research in the same year indicated employee theft as the biggest cause of loss in retail operations, accounting for 50% of losses.
Another study by the American Business Research in 2006 found that 35 billion dollars in U.S. retail sales were lost due to inventory shrinkage (theft) and additional billions lost due to human errors by employees.
Undoubtedly, employee security has been a headache for retailers around the world. To comply with the law regarding financial reports and protect profits, businesses need to implement safeguards against employee fraud, including theft and transaction fraud.
First and foremost, retailers need to make employees aware of the consequences of dishonest behaviour. In other words, a loss prevention programme stipulating guidelines and punishment should be in place before technology can come in to assist in better implementing it.
An effective retail management system enables retailers to control access to specific features and data in the system and related programmes. For example, only the users specified will be able to edit quantity or cost information for inventory items. Businesses can also:
- Control the granting of discounts
- Control the types of tender that can be accepted
- Control the creating/editing of records