By Macharia Kamau
Retailers and supermarkets are losing huge proportions of their high value stock to theft by employees manning outlets.
While shoplifting by customers is also prevalent in retail outlets, experts note that collusion between supermarket staff, customers and suppliers to steal from the store is high. Among the goods likely to be lost through in-store theft include electronics, phones and other high value gadgets.
Employees have devised crafty methods to perfect the vice. They in most cases enlist the services of customers, suppliers and vendors to steal, denting the earnings of large retailers. “A substantial proportion of the loss is due to collusion between the retailer’s staff on one side, and the suppliers or customers on other side,” said John Wanjohi, finance and administration director Hipora Business Solutions, a firm that offers solutions aimed at reducing instances of retail theft.
“We have seen instances where a customer buys a fridge or freezer and they get into agreement with an employee. During packaging, the employee will stuff the fridge with DVD machines or other small but high value goods, mostly electronics, and they split the proceeds of the loot later.”
It is estimated that the local retail industry loses about Sh3 billion yearly to shoplifting and other thefts. Wanjohi noted that the figure could be higher since there are no mechanisms to quantify actual losses.
He attributed this to failure by retailers to take frequent stock of their goods. He observes that most retail outlets are still porous, especially at entry and exit points of goods.
“It is difficult to establish the actual losses incurred by retailers... quarterly stock taking can give a good picture of the shrinkage but most retailers do it yearly,” said Wanjohi.
The Global Retail Theft Barometer – an annual report on retail shrinkage — stock loss due to theft, shoplifting and administrative errors said retailers around the world lost $119 billion (Sh1 trillion) with employee theft accounting for 35 per cent.
South Africa is the only Sub Saharan Africa country surveyed, with the results showing high rates of shrinkage. Retailers in the country reported a shrinkage rate of 1.7 per cent.
“The retail industry in South Africa is slightly advanced than ours and we are borrowing heavily from them.
If they are losing large stock in retail outlets, it might be a pointer that our local retailers might be losing more,” said Mark Marshall, managing director, Retail Management Solutions. Atul Shah managing director Nakumatt Holdings noted that shrinkage could be on the rise due to emerging organised pilferage ring targeting local supermarkets.
He noted that locally retailers suffer losses estimated at more than 1.5 per cent of turnover due to increased cases of shoplifting and general store stock losses arising from theft.
Electronic items, furniture items, baby food products cosmetics and general food items are among the items that are likely to be stolen. With the formal retail trade market estimated to be worth more than Sh200 billion, the industry could well be losing above the estimated Sh3 billion annually to shoplifters among other loss avenues. “What we thought to be small time cases of shoplifting has evolved to become organised crime, leading to high shrinkage rates on our stockholding,” Shah said at a recent retail conference in Nairobi.
“It’s extremely alarming to note that conventional in-store policing measures are not helping much and there’s an urgent need to review existing laws to make them more punitive both for shoplifters and employees tried under theft by servant clauses.”
The incidences of shrinkage by employee and customer is forcing retailers to invest in additional surveillance mechanisms, including closed circuit television cameras and contracting independent firms that deploy their own staff to undertake on-floor surveillance in retail outlets.
Hipora, with over 450 staff is sourced by retailers and other businesses. It provides logistic training, retail operations and technologies used in reducing shrinkage. It also ensures employees do not engage in theft.
