If you think a sweet-heart sale is a Valentine’s Day promotion, think again.  It refers to employees “sweet-hearting” a friend at the point of sale, in other words giving a discount to someone not entitled to one. It can also refer to giving a undeserved refund to a friend or acquaintance, or to handing over merchandise for free.

None of us like to think of our employees as stealing from us, but it does happen. According to a National Retail Federation survey quoted in an article in the New York Times last month, employee theft in 2008 was a stunning $15.5 billion.

“The retail industry has come to the realization that, as the Pogo comic strip said, ‘We have met the enemy, and he is us,’ ” said Richard C. Hollinger, the survey’s principal author and a professor of criminology at the University of Florida

The most common type of employee theft is “sweet-hearting,” in which cashiers fail to ring up or scan goods that friends or relatives present at the register, Professor Hollinger said. Stealing from the till remains a problem, too. But with gift cards continuing to grow in popularity, they are an increasingly easy target.

The fraudulent activation of gift cards is a relatively new form of “sweet-hearting,” but one that can do the store a great deal of financial harm.  Users are rarely asked to show ID, and a stolen or sold gift card does not have the same data trail as a stolen credit card.

What can you do to protect your store?  A discussion with your staff showing that you are aware of the possibility of these types of theft would be a start.  The fact that you are keeping an eye out for dishonest activity may be a deterrent in itself, and of course you should state in your employee handbook that theft and dishonesty are cause for immediate dismissal.

Large stores frequently use the latest in cash register technology and point-of-sale surveillance equipment so that employees know that their actions are being followed.  This is a radical step for most small retailers, but may be necessary if you feel you are being victimized and cannot find which individual is involved.

You should make it clear to your employees what their staff discount is, and who it can be share with. Some stores allow a spouse to share the employee’s discount. Because not everyone has a spouse, we offer each employee two courtesy discount cards to give to whoever they want. These cards are good for 20% off, and must be shown before the purchase is rung up. 

We also track employee purchases, and require that staff members have someone else ring them up and initial the receipt.  This way we can see how much each employee is buying at their discount.  Stores sometimes detect a suspicious pattern, for example a male employee buying many pairs of women’s shoes, using this method.

Although there are unscrupulous individuals who will steal given any opportunity, most people will not try to harm a business they love. It is important that employees feel involved in the business and that they feel appreciated. As with shoplifting, retail theft by an employee can be a way of expressing anger.  Get your staff involved, make them feel appreciated, and pay them fairly.

Happy Retailing,

Carol “Orange” Schroeder

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