Retailers Reduce Shrink with Supreme

The fall season means cooler weather, back-to-school, colored leaves, and shorter days… and for retailers, it signals the beginning of the the time period where they’re most likely to experience not just their biggest sales volumes of the year, but also their biggest hits to the bottom line from shrinkage.

Shrinkage is a retail industry term used to describe loss from employee theft, shoplifting and other retail fraud. According to the National Retail Federation/University of Florida National Retail Security Survey, retailers say inventory shrink averaged 1.38 percent of retail sales, or $44 billion, in 2014.* The report was sponsored by The Retail Equation.

Specifically, retailers surveyed estimate that shoplifting accounted for the largest part of reported shrink in 2014 – 38%, followed by employee/internal theft at 34.5%.

Closed Circuit TV (CCTV) Surveillance Systems – The Bottom Line

Over the past decade the technology behind CCTV camera systems has made great advancements from the not-so-recent past when security cameras recorded footage onto a VCR tape. At the same time, the total cost of ownership for these systems has been steadily going down, which means that the technology is now more accessible  to a greater number of retailers of all types and sizes than ever before. “The cameras that we (as an industry) are installing nowadays are all IP-based and network-enabled, which allows users to access high-quality footage on connected computers within their facility or location, as well as connected devices and computers outside of their facility,” said David Bitton, COO of Supreme Security Systems.

While CCTV surveillance is a well-established and proven solution for reducing shrink, it is not feasible to simply install a few cameras and hang some signs and expect a noticeable and fast reduction shrink. “The security and risk management concerns of retailers are often specific to their industry and location, so one size does not fit all,” Bitton continued: “a CCTV system that is custom-designed for each store and location will have a significant impact on employee theft, shoplifting and vendor fraud, and we find that it only takes a matter of months before the system pays for itself with 100% ROI achieved.”


Employee/Internal Theft

Employee theft can take many different forms. Everything from “sweethearting,” which is giving unauthorized discounts to friends and family, to simply “shorting the till,” which is taking currency from the register, to surreptitiously moving merchandise off-premise from the sales floor or backroom.

A common formula posits that 10% of employees are fundamentally dishonest and will steal from their employer whenever possible – another 10% will not steal from their employer – out of any circumstances whatsoever, and the remaining 80% of employees are generally honest, but under certain circumstances or conditions, they could cross the line and engage in employee theft.


When retailers deploy a custom-designed Closed Circuit Video (CCTV) surveillance system with comprehensive monitoring capabilities, including employee monitoring and remote monitoring, shrinkage loss linked to employee theft usually plummets immediately. Not only will the solution “catch” thieves in the act, its presence serves to deter the “on the fence” employee who is thinking about committing theft. In other words, an effective CCTV system serves as a deterrent and keeps these workers “honest,” essentially adding the 80% of employees who may steal if they thought they wouldn’t get caught, which leaves the retailer with a 90% “honesty rate” when it comes to employees. Many retailers who have installed CCTV systems have also noticed an increase in productivity, because employees know that they are able to easily access what they are doing during their shifts.



Shoplifting involves taking items from the store without paying for it. According to the National Association for Shoplifting Prevention, “approximately 3 percent of shoplifters are “professionals” who steal solely for resale or profit as a business. These include drug addicts who steal to feed their habit, hardened professionals who steal as a lifestyle and international shoplifting gangs who steal for profit as a business. “Professional” shoplifters are responsible for 10 percent of the total dollar losses.”


CCTV systems are essential to lessen the shoplifting loss. Conspicuous cameras and signage informing that premises are under surveillance will deter a good amount of the 97% of casual shoplifters and petty thieves, and if a shoplifter is caught in the act, CCTV footage can be used as proof.


Vendor/Supplier Fraud

This type of shrink describes employees of both the retailer and the suppliers colluding to steal inventory. A typical situation involves merchandise disappearing from the premises after it is delivered but before it can be properly accounted for and added into inventory.


A CCTV surveillance system with well-placed cameras along with access control measures ensures that any door openings and closings can be easily tracked and reviewed for audits.

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