The term “retail shrinkage” encompasses any financial losses due to employee theft, customer shoplifting, vendor fraud, and administrative errors. Globally, inventory shrinkage exceeds $125 billion annually. Of that amount, employees account for 35 percent, customers 43 percent, vendors 6 percent, and administrative errors (faulty paperwork and computer entries) 16 percent.

As a result of the wide extent of employee theft, more retailers are developing and enacting technology-based tracking to monitor employee behavior.

Stephanie Clifford and Jessica Silver-Greenberg report for the New York Times that: “Facing a wave of employee theft, retailers have helped amass vast databases of workers accused of stealing and are using that information to keep employees from working again in the industry. The databases, which have tens of thousands of subscribers and are used by major retailers like Target, CVS, and Family Dollar, are aimed at combating employee theft, which accounts for a large swath of missing merchandise. But the databases, which are legal, are facing scrutiny from labor lawyers and federal regulators, who worry they are so sweeping that innocent employees can be harmed. The lawyers say workers are often coerced into confessing, sometimes when they have done nothing wrong, without understanding that they will be branded as thieves.”

One of the largest provider of information is First Advantage Corporation’s Esteem database.

Click the logo to read more of Clifford and Silver-Greenberg’s story.