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How to Prevent Retail Employee Theft in Stores

Prevent retail employee theft - whistleblowing software and aml risk solutions

Protecting your business from threats usually means external threats. Yet a third of theft in retail stores is committed by your staff.

You need to know what to look out for and how to prevent internal retail theft or fraud from happening. You’ll also need to implement internal controls to dissuade your staff from stealing from you in the first place.

Obviously not all staff are stealing from you. But more than a few are, and to make matters worse, others know and don’t say anything to you. You need to know what types of crime are being committed by your staff. You’ll also want to know how to deal with it, how to have enough information to challenge and what to do when you do.

What is retail employee theft?

Why do retail employees steal?

Different types of retail employee theft

How to prevent retail employee theft

How to deal with retail employee theft

Learn how you can stop retail employee theft today.

HX5 deploy Aranea into your business. This allows every member of your team to have a mobile app on their phones. The app allows staff members to talk to you, safe in the knowledge they’re not being identified by you.

Your staff don’t want to get involved in another team member being sacked. In a recent study, it was found that over 40% of staff know when wrongdoing is ongoing but won’t report it for fear of being embroiled in the saga.

What is retail employee theft?


Retail employee theft is generally defined as any stealing, use, or misuse of an employer’s assets without permission.

Employee theft is not just stealing physical items. There are many ways a member of your team can steal from you. It could be just misusing company assets or over invoicing and pocketing the difference. It could be re-directing orders so they don’t arrive but the invoice does.

It is highly unlikely to be cracking open your safe, it will be much more subtle than that. And it can sometimes be over a prolonged period, mounting to substantial loses.

In another study by the Retail Gazette it is estimated that 40% of your losses are from your own team and across the UK this is adding up to a colossal £4.2 Billion a year.

Employee theft isn’t something that should be taken lightly. Left unchecked, over time, it can result in poor staff morale, loss of profit, higher consumer prices, and even bankruptcy. Businesses who do not deploy adequate protections can and will fail.

Why do retail employees steal?


Rose Sutton, Senior Speciality Lines Claims Expert, at Zurich, has said that: “as cost of living pressures mount, employee theft has significantly increased, suggesting some workers could be turning to desperate measures to make ends meet.”  But this is the rosy viewpoint.

A recent study states that eight in every ten employees are disaffected and have lost commitment in their role. This can lead to feelings of resentment if they don’t get adequately recompensed. A bad boss can make staff members dislike their job. Some staff might pass on perks entitled to them as a staff member to friends and family, or worse, not put items through the till resulting in a final bill for that customer smaller than it ought to be.  Some may be stealing for revenge on the store for some reason.

It could be just as simple as they are stealing because they can and there are insufficient controls in place to prevent it.

What are the methods of retail employee theft?


There are many ways to steal.


“Sweethearting” is when a cashier will deliberately not ring up goods that a friend or family member is buying. It can also be when a cashier supplies their store discount to their friends or family members.

Stealing stock

Employees might steal products from you, whether to keep for themselves or to sell somewhere on the internet. Staff find ways to get the goods out of the store, usually hidden on them or hidden outside for retrieval later.

Gift-card theft

Gift-card theft is difficult to detect. Staff will issue fake refunds to gift-cards they will keep. They may also give a customer purchasing a gift card a blank gift card while keeping the loaded one.

Skimming out of the till.

Skimming off the top of the till is very common. Employees who know that you won’t care about a discrepancy of a few quid in the till take advantage by skimming, what turns out to be a large amount over time.

Identity theft

This is more aligned to stealing from your customers, as they assume the customers identity, leaving your store reputation damaged if it is uncovered by the customer.

How to prevent retail employee theft


The best form of defence is prevention. If you prevent your staff from stealing in the first place it also saves on the impending human resource costs.

1. Run background checks on all new employees.

Here are some tips for conducting background checks:

Use background checks, just don’t use “the box.” That means, don’t ask someone if they have a criminal background on their paper application just to weed people out. Conduct interviews first and get to know someone first to avoid unnecessary discrimination.

Make sure everything you do to check one applicant, you do on them all.

It is important to use a professional agency to do background checks.

2. Ensure that all employees are well-trained to prevent accidental loss.

Retail employees might make mistakes in their role. Whether it’s entering a typo, or giving the wrong discount, mistakes happen and they can really add up. Make sure you have controls in place to pick errors up early as ‘nipping’ things in the bud quickly can stop patterns resulting in a dismissal. It also highlights to staff, you’re on the ball.

3. Institute ePOS software to make it easier to monitor for discrepancies.

You certainly could audit receipts every day, or week, or month to try to discover patterns of loss in your store. But you could also just implement an ePOS system that will do the work for you every day.

These reports will make it easy for you to notice patterns (like if the cash register has been consistently down) and will make it noticeable when you do inventory checks what exactly is missing.

4. Cash up every day.

Cashing up every day makes sure your staff know you are checking and you will spot discrepancies in the cash. It is a vital step to preventing retail employee theft.

5. Make sure two take out the rubbish

Making sure you always have two staff members removing rubbish stops things being hidden in it for later retrieval.

6. Deploy surveillance software.

Surveillance software isn’t just video cameras anymore. Now the cameras are equipped with software that can help them detect such activities as “sweethearting” and alert you to the problem.

How to deal with retail employee theft


If you’ve implemented the tips we’ve already covered, you will have reduced the risk of employee theft quite dramatically. However, if someone does slip through the cracks, here’s how we recommend to deal with it:

  1. Ensure you have a robust HR policy and highlight theft or fraud as a gross misconduct offence resulting in termination of contract and prosecution.
  2. Collect and document as much evidence as possible, making sure you time and date everything.
  3. You cannot just accuse an employee of theft. Make sure you have a cast iron case.  Run audits, collect receipts, and put together the correct video footage. Get ‘duty’ statements from any staff that are prepared to go on record.
  4. Call your local police station for advice. But remember, they may make the decision for you with regard to prosecution. You can use the threat of prosecution to terminate the employees contract without having to actually do it. Your local police station can provide you with advice on how to document retail employee theft and even give you interviewing tips.
  5. Interview the employee. It is critical they don’t know beforehand what the interview is about. You should stage your disclosure so that the employee is faced with increasing volumes of evidence as the interview unfolds. Through this you can get them to admit the offence because the lies they tell before you reveal your evidence will damn their story. Try and get them to feel remorse, this often results in an admission of guilt.
  6. Prepare all the paperwork in advance, including dismissal paperwork and, if possible, their final payment.
  7. Always interview with two managers to prevent accusations later on.
  8. If you are going to prosecute the employee legally, call the police after the employee has confessed. You must be prepared to go to court to give evidence. Here is some help to prepare.
  9. Your employee is legally allowed to get up and leave at any time, and you must do nothing to prevent them from doing so.
  10. Terminate their contract. This is always a difficult thing to do. But you cannot allow theft in any form because it spreads to other members if they think they can get away with it. Termination of their contract is always a must when you have the evidence.
  11. Frequently forgotten, is the impact on other staff. You should always, always inform them that the staff member has been dismissed. You do not have to say why, and in fact you shouldn’t. But your staff will likely know because dismissal is a serious thing and it requires serious misconduct for it to be instant. They will know what has happened and it is highly likely some of them knew before you that the staff member was stealing.


A simple introduction of an anonymous method for your staff to report wrongdoing can be a deterrent in itself. Any criminal knows that frequently the only evidence you can rely on is that of witnesses. So by putting a reporting device on every staff members phone, allowing them to report who is stealing is enough to deter them from continuing. HX5 is owned by a retired senior police detective. Not only can HX5 help you to stop theft, they can also help you to detect it.