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WASHINGTON - Food retailers and wholesalers report that shoplifting, employee theft, and check fraud remain the greatest sources of annual losses, according to a report released today by the Food Marketing Institute, 2004 Security and Loss Prevention Issues Survey in the Supermarket Industry.
"Food retail and wholesale companies continue to make loss prevention a top priority," said FMI director of education Wayne Breckenridge. "By illustrating the areas of store operations that are most affected by theft, this survey enables executives to measure the effectiveness of loss prevention programs. It also shows that companies are aggressively taking action to minimize future losses."
Survey respondents, operating nearly 7,000 stores, said they apprehended 130,201 shoplifters in 2003, an average of 22.7 per store -- nearly the same number as in 2002. The value of merchandise recovered per incident averaged increased $6.41 to $51.71, totaling approximately $4.5 million from all the responding companies. Of the shoplifters apprehended, approximately 27 percent were juveniles (under age 17) and 73 percent were adults.
Shoplifting thefts occurred throughout the store, according to the report, with six types of products targeted most often: health and beauty care (HBC), meat, analgesics, baby formula, razor blades, and cigarettes. Retailers have been successful at reducing theft of some of these items, particularly cigarettes, by restricting access.
Retailers are combating shoplifting with the use of electronic security systems, according to the report. Approximately 22 percent of companies surveyed use electronic article surveillance and 55 percent use video surveillance equipment. In addition, 73 percent of stores utilize digital store delivery (DSD) receiving systems.
In 2003, companies averaged 615 detected thefts, a slight drop from 2002, according to the survey. The average value of cash or merchandise recovered in each instance of detected employee theft was $622.90, a significant jump from the $452.10 recorded in 2002.
The cashier station was the location most often subject to employee theft -- nearly 40 percent of all thefts occurred here. Approximately 20 percent of the detected incidents occurred in sales and service areas. Other departments targeted by employee thieves: cash office, 13 percent; back room, 10 percent; customer service/courtesy booth, 9 percent; and fuel stations, just under 1 percent.
A large proportion of thefts, approximately 48.5 percent, involved merchandise and/or cash. A combination of discounting or "sweethearting" and sliding (intentional failure to scan) accounted for 25.5 percent of thefts. Additional theft areas included voids/refunds, snacking, fraudulent coupon redemption, and the back door.
Worthless checks continue to be a costly problem for supermarkets, resulting in a total net loss of approximately $100 million for responding companies. They accepted an average of 80,384 bad checks for an average net loss in 2003 of more than $4.9 million per company. The value of each bad check averaged $116.67.
Consistent with previous years, the most common method of check fraud prevention is an internal authorization system at the point of sale. Just over 71 percent of companies in the survey used an internal system. Other fraud-prevention methods include outside authorization systems (60.7 percent) and check guarantee services (17.8 percent). Fifty-seven percent of the companies use only one method to initiate collection, whereas 28.6 use two or more.