6 Ways To Identify Employee Theft Using Your POS [and How To Prevent It]

Shoplifters lurking in your aisles, swiping valuable products off your shelves, and sneaking past your checkout counters. 

This might be what you think of when you picture “retail theft” — but unfortunately, theft often comes from inside your store’s walls. 

In this blog, we’ll explore everything you need to identify and prevent employee theft, including red flags to look for and six simple ways to protect your products and profits. 

Employee Theft 101

Let’s start with the basics: What is employee theft, and how does it affect your store?

While some thieving employees behave like traditional shoplifters by simply stealing merchandise from your shelves, others work in more subtle ways. For example, they might: 

• Take small amounts of cash from your registers each time they make a sale.
• Manipulate the price of customers’ items at checkout and pocket the difference.
• Add unauthorized discounts to benefit themselves or their friends and family.
• Issue fraudulent returns and take the refunded cash.

Since your employees have frequent and in-depth access to your business’ resources, they pose an even bigger risk to your store than strangers do. 

However, you can still achieve peace of mind by knowing how to spot and stop internal theft. Let’s look at six essential strategies to protect your bottom line. 

1. Understand Your Store’s Unique Risk Factors

First, you need to know what you’re up against. 

You should understand common employee theft tactics, but you should also take a closer look at the risk factors unique to your store’s industry and business model. 

For example, items like tobacco, alcohol, cosmetics, and electronics are prime targets for theft, so smoke shops, liquor stores, convenience stores, and electronics shops may need to take extra steps to secure their inventory. 

Businesses that hire seasonally, like garden centers in the summer or gift shops around the holidays, are also at higher risk. That’s because you’re bringing in a larger group of temporary workers who don’t have a relationship with you or loyalty to your store. 

Small retailers are also more vulnerable to employee theft in general. Unlike big-box stores and nationwide chains, you probably don’t have the budget to hire a dedicated loss prevention team — which means you need to take protecting your store seriously. 

2. Improve Your Inventory and Sales Tracking

The first step to identifying employee theft is to monitor your sales and inventory records. If you don’t, you won’t be able to identify discrepancies until they’ve made a noticeable dent in your profits. 

Investing in the right point of sale (POS) system makes implementing this tip a breeze. Look for one that includes real-time inventory tracking and in-depth sales reporting. 

Along with helping you keep your store’s shelves perfectly stocked, this tool automatically compares your inventory and sales records, alerting you when something seems amiss. This tracking allows you to spot theft before it turns into a profit-draining disaster. 

3. Closely Monitor Your Shrinkage

Want to make it even easier to identify employee theft? Look for a POS system that tracks shrinkage. 

Shrinkage reporting helps you monitor shoplifting, spoilage, breakage, and vendor mistakes — all of which can drag down your bottom line. 

But be aware: Your team will try to disguise their theft as routine shrinkage and loss. For example, thieving liquor store employees might log stolen bottles as broken, and grocery store employees might categorize stolen goods as spoiled.

If your POS reports reveal higher-than-usual levels of shrinkage, it’s a good idea to investigate further and ensure your employees aren’t the culprit. 

4. Set Up Employee Roles and Permissions

Thieving employees do their best work behind your store’s cash registers. They might adjust prices, apply discounts, open your cash drawers, issue false returns, or void transactions in order to take money from your store. 

That’s why setting up individual accounts with strict permissions for each of your employees is crucial.

This step lets you monitor your team members’ activity within the POS system, and it provides guardrails to ensure they can only access the tools and data they need to handle their day-to-day responsibilities. 

For example, you can require a manager’s approval or get an alert every time a cashier issues a discount of over 10% or processes a return without a receipt. 

5. Leverage Security Cameras

Security cameras are a must-have for deterring shoplifters and ill-intentioned employees — but monitoring them around the clock is impossible. 

That’s why we recommend investing in a POS system that integrates with your store’s security cameras. 

With this integration, you can tie specific POS transactions to a timestamp in your security footage, making it easy to investigate potential employee theft. 

6. Communicate With Your Team

The best time to stop employee theft is to take action before it starts. 

During your training sessions and staff meetings, tell your team about the technology you’re using to monitor fraudulent activity and employee theft. Don’t forget to clearly outline your store’s policies for handling cash, applying discounts, logging spoiled or broken merchandise, and issuing returns! 

If your employees know your policies and security strategies, they’ll be less tempted to steal from you. 

Prevent Employee Theft With the Right POS System

A powerful POS system is your best defense against employee theft — which is why our number-one tip is to invest in one with robust security features. 

Here’s what to look for: 

• Real-time inventory tracking
• Shrinkage, spoilage, and breakage monitoring
• In-depth sales reporting and analytics
• Customizable employee roles and permissions
• Security camera integration

Looking for a POS system that has these tools and meets your store’s needs? We can help! 

Whether you’re in the liquor, tobacco, grocery, electronics, convenience, or general retail industry, we’ll connect you with a POS system that includes everything you need to secure your profits, build a loyal customer base, and make more sales. 

Schedule your personalized demo with one of our retail experts to find the perfect POS system for your store.