Wal-Mart Posts a $3 Billion Dollar Loss Due to Theft

Someone walks into your local neighborhood Wal-Mart, picks up a flat screen television, and walks out without paying. According to the Associated Press, this is happening everyday at Wal-Marts around the world, and Tuesday Wal-Mart posted a $3 billion dollar loss for the year of 2006, due to theft.

While the retailer is not giving details on what types of crimes are being committed in the stores, analysts say shoplifting, employee theft, paperwork errors and supplier fraud are the main contributers.

"We are concerned about shrinkage and are investigating the cause and are taking steps to correct it," said Eduardo Castro-Wright, president and CEO of Wal-Mart's U.S. store division. However, company officials won't comment on those countermeasures.

Some people have accused Wal-Mart of cutting its security staff over the past few years by as much as 40 percent, but Wal-Mart rejects these claims. Adding that employee morale has risen over the past year, not fallen.

While a $3 billion dollar loss would be devastating to most companies, it hardly put a dent in Wal-Mart's profits. In fact, they posted $348.6 billion dollars in sales last year.

Since the introduction of new technology in the mid-90's, shrinkage throughout the retail world has declined. However, all the technology in the world is futile when store employees are in on the scam.

According to the National Retail Federation report for 2006, 47 percent of all dollars lost came from employee theft, while shoplifting accounted for about 32 percent, administrative errors account for 14 percent, and supplier fraud accounts for 4 percent. The remaining 3 percent remains unaccounted for.

A common scam occurs when a cashier at Wal-Mart allows someone to walk out of the store without paying. The cashier will make it look as though they have scanned the item, fooling security cameras, when in reality they never scanned the product at all.