A new survey by PricewaterhouseCoopers and Retail Council of Canada reports that Canadian retailers are losing more than $3 billion every year to crime and loss of inventory.

This figure, derived from 2008 results, translates to $8.5 million lost for every shopping day in the country. Shrinkage rates ranged from 0.4% of net sales to 2.3% of net sales.

Sadly, employee theft is the largest area of loss, rating at 35%; followed by shop theft at 32%. Most (70%) feel that store operations staff should be held accountable for less prevention at the store level.

The majority (90%) of retailers say they perform daily loss prevention measures, while 85% say they attempt to detect cash theft by employees at least once every seven days. Vendors, in fact, are also scrutinized by 94% of retailers, 61% of which dedicate loss prevention resources to the supply chain process.

Employees caught stealing are prosecuted more than half the time, reports 60% of the survey respondents; and 79% say customers are prosecuted more than half the time.

"Going forward, retailers may be less apt to pursue costly legal action against employees and customers for theft as a result of budgetary pressures from the economic decline; particularly where they have proven that they can continually prevent or detect it," says Ian Booler, Director, Advisory Services at PwC. "Based on the combination of the responses related to policies and procedures and combined with the shrink levels, we know that when strong governance practices are combined with proven theft prevention methods, Canadian retailers can effectively monitor and control established theft risks. In addition, those retailers who have leveraged a good mix of technology, processes and people, are better positioned to identify and address new theft risks as they come into the retail market."

Online e-tailing is also considered in the theft and fraud equation, with 55% of respondents noting they also run an online store, and all reporting that they routinely monitor online transactions.
Alarm systems, closed circuit TV and armoured car pick-up services have all become industry standards for measuring and reducing losses and monitoring risks.

"While retailers have resources dedicated to preventing losses, they are still heavily reliant on the staff working on the front-lines," adds Bill Yetman, COO for the Retail Council of Canada. "We also see that with tightening economic conditions, pressure is increasing to minimize losses and protect the bottom line. Every retailer is looking to do 'more with less', and staff on the front-line will be increasingly counted on in the coming year."

Employers suggest setting aside time and resources for employee training on theft prevention. Employees themselves should also be screened prior to being hired: 50% of retailers in this survey actually request that employees pass a police background security check!

"One way to identify areas of improvement within individual retail locations is through comprehensive site reviews and visits," says Yetman. "Ninety per cent of our respondents said they perform periodic security audits of their locations to ensure that all security elements are reviewed as compared to corporate policies and procedures. It is clear that, where possible, establishing security best practices should be a priority for Canadian retailers and the survey results indicate that it is."

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