Study: New loss prevention tactics are needed to fight sweethearting

Who is retail’s biggest thief? According to a June 2011 survey by Florida State University and Michigan State University, the answer is actually employees, which account for 43.7% of total retail losses vs. 32.6% which come from shoplifting.

As the numbers suggest, employee theft is a major priority for loss prevention professionals, and they currently deploy a host of strategies including intelligent video surveillance and analytics (check out 3VR’s analytics here) to prevent your most common form of employee theft where an employee steals and pockets the goods themselves.

But what about “sweethearting,” where employees give things away to friends and acquaintances for free or at a discount? Whit Richardson at Security Director News recently reported on a new study, which concludes “traditional mitigation strategies used by loss prevention professionals often don't work” in preventing sweethearting. Two professors from Florida State University and one from Michigan State University conducted the study.

It’s unclear exactly how much employee theft is caused by sweethearting– the June 2011 survey found that 18.7% of cases involved “collusion between internal and external bad actor” and the professors’ study cites another report from the Journal of Marketing that “claims sweethearting is responsible for 35% of companies' annual profit losses in the retail sector.”

Whatever the actual number, it’s clear that sweethearting is big business. But the researchers were curious why so many employees sweetheart, especially when they don’t directly benefit by pocketing the merchandise themselves.

They interviewed 171 employees to find out, ultimately concluding that traditional loss prevention tactics – namely “increased vigilance” and “threat of punishment” - aren’t always effective “because [they do] not take into account the complex nature of the motivations behind sweethearting.”

Instead, the study recommends two lower-tech strategies: including an ethics component in employee training and screening for troublesome personality traits. Time to broaden the loss prevention arsenal.