According to the National Retail Federation, 44% of your shrinkage is caused by Employee Theft. Yep, your own staff is stealing you blind!
Quit being in denial and do something about it.
Here's what you should do...
Background Checks - It starts with the people you hire. Did you look up their court records? (They're available online for free.) Did you call references? Did you verify employment? One of the best applicants I ever interviewed had a string of "retail fraud" charges a mile long. If I hadn't checked, I would probably have been added to her list of conquests.
Training - How well trained are they? Are you sure? Have you gone back and tested after the initial training? Sometimes employee error, not theft, is the cause of your shrinkage. The more thoroughly you train them and also evaluate them, the less likely you'll have this problem.
The Golden Rule - How well do you treat them? It is no stretch of the imagination that employees who are treated well will be less likely to steal than disgruntled employees. It also makes sense that the type of behavior you model is the behavior your employees will follow. Are you stealing from your own store in front of them? If you're taking product off the shelf, they'll begin to believe that it's okay for them to do the same.
Supervision - When the cat is away, the mice will play. Who watches the store in your absence? Do you have a trusted supervisor that will keep an eye on the mice? Having that one trusted person who serves as your backup eyes and ears works well as a deterrent.
Checks & Balances - It is vitally important that you have a system of checks and balances for counting your cash drawers, verifying sales receipts, and double checking deposits. Sticky fingers get caught quickly when you have a system to double check your money.
Video - Sure, it's the last line of defense. Yes, it can cause feelings of distrust and suspicion. No, I don't recommend it for everyone. But the bottom line is the bottom line and if all the other methods haven't slowed down your shrinkage, this just might be the ticket.
The key is to hire honest, ethical people in the first place, treat them with respect, and model the behavior you want to see.
Do this and your shrinkage will go down and your staff morale will go up. Win-win!