How Retailers Leverage Integration to Speed Internal Theft Investigations
Historically, internal theft has been the largest contributor to retail shrink industrywide. The significant rise in organized retail crime (ORC) in 2023 drove external theft to surpass internal theft as the top source of retail loss, but internal theft remains a primary concern.
Merchandise theft, refund fraud, cash theft, and sweethearting continue to be the top reported methods of internal retail crime. Internal theft averaged $2,200 per case in 2022, according to the 2023 National Retail Security Survey.
Employees have several ways to get merchandise to people they know for free or at discounted prices. The employee may use staff discounts to purchase goods for family, friends, or third parties. He or she could look the other way while people swap tags from higher-priced goods to those from lower-priced goods. Moreover, the increasing popularity of self-checkout (SCO) kiosks presents new opportunities for employees to aid thieves.
Disturbingly, employees may act as the “inside” person in a theft coordinated by an ORC group. An insider can educate outsiders on the best times, days, and locations in the store that will allow a theft to go undetected or share with others that the store he or she works at is an easy target.
Evolving Threats and Responses
Retailers are implementing various technologies to combat theft. Tactics include artificial intelligence-based video analytics focused on point-of-sale (POS) systems and self-service locking cases, autonomous security robots, and automatic license plate recognition (ALPR). Retail companies are also establishing teams dedicated to ORC to help discover internal coconspirators.
A key goal of strategies aimed at mitigating internal theft is increasing visibility at POS systems and other areas where theft is likely. As video cameras have decreased in price and increased in quality, video surveillance has become a critical component in combating theft.
Even though adding cameras addresses some of the challenges of external and internal theft around POS transactions by providing increased monitoring, searching for potentially fraudulent activity is a daunting task. Retailers have an enormous volume of POS transactions, and it would take a significant amount of time to manually review the security footage.
A key goal of strategies aimed at mitigating internal theft is increasing visibility at POS systems and other areas where theft is likely.
Technological advances have delivered exception-based reporting solutions to help retailers speed up investigations. These systems allow retail security teams to correlate POS data with corresponding video feed and use additional solutions such as analytics. Surveillance systems can also integrate with emergency alert systems, resulting in real-time notifications with video feeds, intrusion panels, wireless cabinet locks, and access control systems.
By leveraging analytical technology, investigators can enter relevant criteria into a search function, such as a date and time, an employee’s name, SKUs (stock keeping units), motion detection, and more. The solution then scans the POS database for activities that meet the criteria, along with the associated video and the transaction details. Investigators can then quickly identify suspicious transactions, immediately review the associated video for more context, and flag transactions for further investigation.
While the POS is a hot spot for internal theft, retailers are using advanced security technology to alert, track, and audit these areas as well. As retail security leaders work collecting evidence to prove cases of employee theft, evolving security technology can also help retailers prevent thefts.
Scott Thomas is the national director for signature brands at Genetec, a physical security company. Thomas and his team work with organizations in the cannabis, financial, gaming, hospitality, and retail industries via Genetec’s network of system integration partners.