A look at the trends experienced in the retail sector and why none retail organisations should be vigilant and have procedures in place.
DWF has significant experience supporting retail organisations of all sizes where they are victims of theft, fraud, burglary, criminal damage and violence against their staff.
A recent survey by the British Retail Consortium (BRC)* highlighted that these types of incident continue grow in both volume and cost. The BRC estimated that the direct cost of crime to retail organisations in 2014-2015 was £613 million, a 2% increase.
Amongst the wealth of statistics in the report, customer theft saw total financial impact increase by 35% and fraud saw a 55% increase. The average cost of a colleague theft has more than trebled from £290 in 2009-10 to £1,051 in 2014-15.
Our experience working with retailers has led us to develop software, processes and systems to allow our clients to identify the size of the problem they face, put procedures into place to deal with these and report them to us. Through this we are able to recover their loss and help to deter future offences. Incidental losses, such as overpayment of salaries (e.g. too many holidays taken at the time of leaving, unpaid staff loans, sponsorship for professional qualifications) are also identified and recovered.
What this experience has shown is that where any business, in any sector, handles goods or cash, they will be the victim of crime. Whilst it may not be at the levels experienced by the retail sector, it does exist. Where it happens, we find non-retail clients tend not to have a process in place to either identify or recover their losses.
In those circumstances, what a customer or colleague steals or defrauds from you is profit directly from your bottom line.
Can you afford for profit to leak out of your business in this way? If not, here are our suggestions as to what should you should do:
- Think about “Shrink” – which is anything that causes your business to lose money; it could be a systemic weakness (packing too many widgets in a box), damage to goods/property, fraud or theft (goods “falling off the back of a lorry”, cash being stolen). First you have to identify these. The key is to understand your processes and look behind the numbers.
- Where you identify something that seems wrong, think about whether it is the result of dishonesty or error. In the case of the former, what is the value of the loss to your business? You should look to recover that.
- Use a law firm to recover your losses, one who understands this type of work, your business, or ideally both.
- Speak to your legal advisors as soon as you identify a problem. They’ll see it from a different perspective and can offer advice and assistance that will increase your chances of getting your money back.
- Don’t forget the other types of debts you may have, such as overpayment of salaries. You may well find these occur in circumstances when a colleague leaves the business amicably; you can still recover these.
If you have any questions or would like more information, please contact one of our recovery specialists below.
Author: Kevin Feehan
* BRC Crime Survey 2015This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.