How to Detect and Prevent Sweethearting in Retail

With Valentine’s Day around the corner, now’s the perfect time to highlight a common security challenge for retailers: sweethearting.

Sweethearting is a form of internal theft in which an employee gives free or discounted merchandise to a friend, family member or fellow employee. They can accomplish this in many ways:

• Not scanning a product
• Changing the price of a product
• Intentionally voiding a product after scanning it
• Giving refunds or store credit for merchandise that was never actually purchased

Have you ever received a free drink at a coffee shop or bar? Gotten a free car wash because a friend or family member works there? Received an employee discount at a grocery store even though you don’t work there? These are all forms of sweethearting.

Some of the more recent trends in sweethearting involve employees using their store bonus/loyalty card instead of the customer’s card to rack up rewards and free products or putting more expensive products (such as steak) in packaging that carries a lower price tag (such as ground beef).

Employees engage in sweethearting for a variety of reasons, including receiving a better gratuity – in the case of servers and bartenders – or receiving the same in return at the customer’s place of business.

The Not-So-Sweet Financial Impact of Sweethearting

Employee theft costs U.S. businesses billions of dollars a year – and a significant percent of annual profit losses can be attributed to sweethearting.

In the first study to analyze the role of sweethearting in employee theft, nearly 800 retail service employees and customers were surveyed, and a staggering 67% said they had participated in sweethearting in the past two months.

As a result of the crime’s pervasiveness, sweethearting contributes to an annual loss of nearly $50 billion in shrink for U.S. retailers, posing unique challenges to business’ loss prevention efforts.

The resounding question for store owners and managers is: How do I detect and prevent sweethearting?

Using Your Security System to Detect and Prevent Sweethearting

One of the most effective ways to detect and prevent sweethearting is to leverage advanced capabilities of your business data and security systems.

Many retailers are turning to business intelligence software that combines video surveillance and exception-based reporting to catch employee theft and sweethearting in real time.

Using these types of software solutions, business owners and executives can see which employees are stealing and can catch them in the act. Based on specific key performance indicators (KPIs) or exception ranking, these solutions can send automated alerts to notify management with a link to video surveillance footage tied to the data in question.

Additionally, many other sources of data can be tapped into, giving businesses greater insight into their traffic counts, end cap effectiveness, heatmap traffic flow, loyalty card activity and a variety of POS exceptions – such as no sale, cash sales, high-dollar transactions, repeated transactions, excessive returns and coupons/discounts, employee discounts and repeat customers, to name a few.

By analyzing various business and security system data, the software can differentiate between different types of transactional parameters, as well as rank them based on importance, to identify areas of concern correlated with supporting video surveillance footage to tell a more complete story.

Dynamic dashboards and customized reports can then highlight where the greatest losses are and the employee(s) in question, what action of concern was performed, which terminal the action occurred at, and show corresponding video footage for management’s review.

This type of software helps businesses monitor and identify untrustworthy employees, increase apprehensions and prevent further loss due to a variety of questionable behaviors.

Sweethearting – and other forms of internal theft – is a pervasive crime that can be detrimental to many retailers. However, it can be detected and deterred by leveraging security systems and advanced software solutions designed to boost loss prevention measures.