Jul 14, 2003
WASHINGTON, DC — July 14, 2003 — Food retailers and wholesalers report that shoplifting, check fraud and employee theft remain the greatest sources of annual losses, according to a new report released today by the Food Marketing Institute (FMI), 2003 Security and Loss Prevention Issues Survey in the Supermarket Industry.

“Loss prevention continues to be a top priority for all food retail and wholesale companies,” notes MaryAnn House-Abate, senior director of loss prevention services at FMI. “This survey enables executives to measure the results and costs of their security and loss prevention programs, and to more effectively target their security and loss prevention priorities.”

Shoplifting

Shoplifting continues to be one of the most common and costly types of loss for food retailers. Survey respondents, representing nearly 14,000 stores, apprehended 227,860 shoplifters in 2002, an average of 22.2. The value of merchandise recovered per incident averaged $45.27, totaling approximately $9.2 million from all the responding companies.

Shoplifting thefts occurred throughout the store, according to the report, with five particular types of products targeted most often: health and beauty care (HBC), meat, analgesics, razor blades and baby formula. For the eleventh year in a row, cigarettes continued to decline as a shoplifting target due largely to recent laws restricting the display and sale of tobacco products and limiting shopper access to them.

Check Fraud

Worthless checks continue to be a costly problem for supermarkets, resulting in a total net loss of approximately $316 million for responding companies. They accepted an average of 153,229 bad checks for an average net loss in 2002 of more than $7.1 million per company. The value of each bad check averaged $73.60.

Retailers are incorporating more methods to prevent the acceptance of worthless checks. Consistent with previous years, the most common method is an internal authorization system at the point of sale. Just over 82 percent of companies in the survey used an internal system. Other fraud-prevention methods include outside authorization systems (67.4 percent) and check guarantee services (2.2 percent).

Employee Theft

Food retailers continue to be plagued by employee theft. In 2002, companies averaged 634 detected thefts, a 17 percent increase from 2001, according to the survey. The average value of cash or merchandise recovered in each instance of employee theft discovered was $450.69.

The cashier station was the location most often subject to employee theft — 42 percent of all thefts occurred here. Approximately 25 percent of the detected incidents occurred in sales and service areas. Other departments targeted by employee thieves: customer service/courtesy booth, 11 percent; back room, 9 percent; cash office, 7 percent; and fuel stations, 1 percent.

A large proportion of thefts, approximately 47.3 percent, involved merchandise and/or cash theft. A combination of discounting or “sweethearting” and sliding (intentional failure to scan) accounted for 23.5 percent of thefts. Additional theft areas included snacking, voids/refunds, fraudulent coupon redemption and the back door.

Enhancements to the report this year include data on the amount of counterfeit money and counterfeit checks collected, the use of background screening, access control procedures, and crisis management plans and response. Other segments of the report contain information on robberies and burglaries, drug testing, theft hotlines, crime vulnerability, and security and loss prevention budgets and expenses. Data trends from 1997 through 2002 are highlighted for key variables. Data are also presented for companies with stores in the Northeast, North Central, Southern and Western regions of the United States, as well as Canada.

To purchase 2003 Security and Loss Prevention Issues Survey in the Supermarket Industry ($25 FMI members, $43 associate members, $50 nonmembers), visit the FMI Web site at www.fmi.org/pub or contact the FMI Store at (202) 220-0723.