A huge headache for any retailer is theft by both customers and employees. Shoplifting in Maryland totaled about $450 million in 1990, according to Thomas Saquella, president of the Maryland Retail Merchants Association. That is an increase of 35 percent during a four-year period. He estimated that theft costs the average honest consumer about $300 annually in higher prices.
That figure may drop because of a law passed in the last General Assembly. Previously a retailer who caught someone shoplifting had two options. The merchant could let the person go or call the police and file criminal charges. Ultimately it meant a day in court. In most cases, an amateur would be let go. But the civil recovery law gives the retailer another choice. Under this law, which became effective July 1, justice can be done right in the store.
Suppose the retailer catches someone who has stolen a purse. As always, he or she can call the police and then file criminal charges. Or, if the retailer prefers, the shoplifter can be given a letter demanding a certain payment. If the lifted item is returned unharmed, the amount owed would be twice the retail price of the item. The law establishes a floor of $50 and a maximum of $500. If the property is damaged, the shoplifter must pay the replacement value as well.
The person is obliged to present proper identification and make the payment to avoid prosecution. The demand letter may be handed to the person or mailed later. The shoplifter is entitled to two subsequent notices for payment -- the first in 15 days and the second in another 10 days. If the person is a minor, the parents get the letter.
According to Saquella, the industry estimates that between 35 and 60 percent of the shoplifters will simply pay the fee. Because there are no criminal records, the law provides a second chance for an amateur who made a mistake.
If payment is not made, then the merchant files the case in the local district court as before. It is advisable for the merchant to create a confession sheet that is designed so the shoplifter can fill in the blanks at the time the person is caught and agrees to pay the charges. The sheet will be helpful if the matter ends up in court after all.
Avoiding shoplifting: Prevention is based on common sense. Even large stores have placed expensive merchandise next to an easy exit. Instead retailers should put inexpensive, bulky items next to a door and expensive goods close to the sales staff.
Most people have noticed the special tags attached to merchandise. They trip an alarm at the exits to the store. These have become more sophisticated over the years so that some of them resemble regular price tags.
Video cameras also offer some deterrence, but nothing replaces the human element. Salespeople who are watching the floor will hinder the efforts of a shoplifter.
Theft is not limited to any particular ethnic group, gender or economic status. In describing the profile of a typical customer who steals, Saquella said the average shoplifter is a Caucasian, middle-income female between the ages of 35 and 50. Many incidents occur due to a psychological need to steal, since about 70 percent of these people can usually pay on the spot for the stolen item, he said.
Thieves on staff: Employees account for about 25 percent of the inventory theft, according to Saquella, which is 2.5 percent of
every sale dollar. One of the best ways to reduce the expense is to have a good screening process for job applicants. Beware of unstable employment history. Keep in mind that the average retail clerk does not generally stay at one job for three to five years, but a pattern of switching jobs every six months should arouse suspicions.
Lie detector tests for employment are no longer legal, however written tests that give an indication of a psychological profile are. These tests frequently require only about 10 to 15 minutes for the applicant to complete and about the same amount of time to score the answers. A rating sheet to help the retailer interpret the results is supplied with the product. The cost can be a few hundred dollars, but after the initial expense all the merchant needs are new forms.
Another tool is to review an applicant's credit report. This can become expensive at $30 to $40 each, but it might be worth it when hiring a supervisor.
At least 50 percent of the hiring process should be based on the retailer's gut feel about the person based on a personal interview.
Tight procedures: Inventory control is essential. One person should handle the paperwork and another person should verify the merchandise as it arrives. Assigning two people reduces the potential for theft while vendors make deliveries.
At the cash register, the owner or store manager should be involved in all voided transactions. A clerk will not be able to make a cash sale, enter it into the register, void it after the customer leaves and pocket the cash.
The cash register can be connected to a computer to utilize a "price look-up system" or PLU. When an item is purchased, the cashier enters a code number on the price tag and the computer feeds the proper price to the cash register. The PLU prohibits the cashier from entering an incorrect amount. The computer also updates the inventory list to show the item was sold. At any point, the inventory list can be printed for comparison to the merchandise in the store.
The bottom line: Using common sense and some internal procedures will sharply reduce theft on the sales floor and out the back door.
Patrick Rossello, president of The Business Consulting Group in Towson, is a member of a number of local advisory boards. Send questions or suggested topics to him c/o Money at Work, The Evening Sun, 501 N. Calvert St., Baltimore, Md. 21278.