Unseen Losses: The Most Important Thing to Know About Theft at Your Hardware Store

It’s a harsh reality, but sometimes, your own employees can be the source of significant revenue losses. While the average shoplifting incident costs a retailer around $350, the average employee theft incident costs approximately $1,377!

Running a hardware store, like any other brick-and-mortar shop, means dealing with the unavoidable headaches of losses due to shoplifting. There are many ways to mitigate shoplifting shrinkage, but one of the most financially harmful categories of theft is often overlooked: employee internal theft. In fact, the National Association for Shoplifting Prevention (NASP) reports that, on average, the cost of employee theft is significantly higher than that of theft by a stranger. While the average shoplifting incident costs a retailer around $350, the average employee theft incident costs approximately $1,377! Addressing this problem is crucial for the health of your business.

It’s a harsh reality, but sometimes, your employees can be the source of significant revenue losses. According to a report by the U.S. Chamber of Commerce, employee theft costs businesses in the United States a whopping $50 billion annually. That's a staggering number, but knowledge is power, and understanding that employee theft is an issue is the first step to halt these losses.

The Impact on Your Business

Small businesses, including many hardware stores, are disproportionately affected by employee theft. Studies show that businesses with fewer than 100 employees are 28.5% more likely to experience internal theft than larger enterprises and that up to 30% of small business closures are due to employee shoplifting.

Aside from the obvious financial losses, internal theft can erode the trust placed in employees. It affects the entire team's morale and can lead to a toxic work environment. Moreover, when resources are drained due to theft, it hampers your ability to invest in the store – upgrading security systems or offering new, exciting products.

Spotlight on Solutions

So, what can you do about employee theft?

• Awareness is the first step. Educate your staff about the impact of internal theft on the store and their jobs. Sometimes, a little understanding goes a long way.
• Conduct regular bag checks at the end of each shift. This will act as a deterrent and a way to detect employee theft.
• Implement strict inventory management systems. Keep an eye on your shrinkage average, which categories are the hardest hit, and whether certain, specific items—think small and expensive, like power tools, plumbing fixtures, or even high-end paints—are frequently turning up missing.
• Invest in modern security technology. According to a study by the National Association for Shoplifting Prevention, businesses that use advanced security systems experience significantly lower theft rates.

Additionally, fostering a positive work environment is crucial. Happy employees are less likely to indulge in theft. Offer fair wages, recognize hard work, and provide growth opportunities. When employees feel valued and appreciated, they're more likely to be loyal to the store and less tempted to engage in unethical activities.

Conclusion

Facing the issue of internal theft is tough, but it’s not insurmountable. Educating ourselves and our employees can create a safer, more secure shopping environment. Invest in the right technology, build a positive workplace, and conduct diligent checks at the end of every shift to mitigate the losses caused by employee theft.

Keeping an eye on your inventory and shrinkage numbers is critical in the fight against internal shoplifting—if you don’t know which items and departments are losing the most stock, you can position cameras, lighting, and additional staff accordingly.

Want to learn more about how to protect your hardware store from shoplifting? Please join us for a live webinar, How to Deter Thieves and Retain Good Workers, on Nov. 8, 2023, with industry leader Craig Webb. You can register for the webinar here.

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