Running a retail business is no walk in the park. And neither is recruitment. That said, recruitment is at the top of the agenda for many retail business owners and managers, which will require swift action to keep their business running smoothly. 

However, with speed often comes mistakes. And it’s not uncommon for businesses to get recruitment wrong when they’re in a rush. Fortunately, there is a way for retail leaders to streamline their recruitment process, and it comes in the form of background checks. 

Index The importance of retail background checks Maintaining a positive brand reputation Essential Components of a Comprehensive Retail Background Check Conclusion F.A.Qs

The importance of retail background checks

According to Statista, global retail sales are estimated to grow from $27.4 trillion in 2023 to $32 trillion in 2026. This means that more and more people are going to be involved in the retail industry. With such numbers being involved, the need for stringent background checks is crucial more than ever. 

Let’s look into different aspects of retail business that necessitate background checks.

1. Shoplifting and employee theft 
   According to the National Retail Federation's "Organized Retail Crime Survey" conducted in April 2018, 43% of retailers said they had experienced employee theft in the previous 12 months, and 34% said they had experienced employee theft in the previous year. This is a significant increase from the 29% of retailers who said they had experienced employee theft in the previous 12 months in the 2017 survey. The study also found that the average loss per company due to employee theft was $1.
   
   Retail theft by employees is a problem that costs businesses billions of dollars every year. The following statistics provide an overview of the problem in the United States. 
   
   In 2016, there were an estimated 1,617,161 incidents of retail theft in the United States. This represents a loss of more than $17 billion for retailers.
   
   Another survey from the National Retail Federation reports that retail theft from employees costs the industry hundreds of billions of dollars each year. The shocking reality is that the vast majority of retail theft is committed by employees.
   
   By conducting thorough background checks for retail, retailers can screen out candidates with a history of theft or fraud, thereby reducing the potential for internal theft and protecting their bottom line
   
   
2. Protecting customers and employees 
   Retail employees often have direct interactions with customers, including handling personal information and processing payments. How many times we have witnessed customers coming back again to a store just because of the politeness of an employee? The nature of jobs in retail emphasizes the need for better customer handling, which in the long term benefits the business.
   
   So, whether it is a small retail store or a big retail company, it has to make it a point to offer a great purchasing experience to its customers, and for this, the owners need to have the right employees who can elevate the customer’s experience.  
   
   An enhanced experience is what every customer looks for, and that is also a trade secret in the retail industry to retain customers. Since employees are at the forefront, they play a great role, hence, only hire candidates after thorough employee background checks.  
   
   Using background checks for retail to ensure that employees don’t have a history of violent behavior or other criminal activities is crucial for maintaining a safe environment for both customers and staff.
   
   Background checks for retail help verify that employees are trustworthy and capable of upholding the company’s standards for customer service and safety. This not only fosters a positive shopping experience but also enhances customer trust and loyalty.

Maintaining a positive brand reputation 

A retail brand’s reputation is one of its most valuable assets. It takes a brand’s blood and sweat to build a rapport with its customers. However, negative incidents, such as theft or customer complaints related to employee misconduct, can damage the brand’s public image and lead to loss of business. 

One of the greatest examples of a company losing business due to poor customer care is that of Sears. There was a time when Sears was considered America's greatest retailer. Sadly, that time has long since passed and today the company is in a state of serious distress and, short of a complete overhaul, inevitable collapse. 

According to Consumer Affairs, an astonishing 86 percent of customers are unsatisfied with Sears' customer service. That puts them at the bottom of the rankings under their primary competitors Macy's, JC Penny, and Kohl's.

If Sears can topple, so can the rest. Hence, brand reputation is directly proportional to good employees, especially in the retail industry, where the customer and employees are close in contact. 

Background checks for retail play a vital role in protecting the brand by ensuring that only qualified, trustworthy individuals represent the business. A thorough screening process helps prevent potential issues before they arise, preserving the brand’s reputation and credibility.

Essential Components of a Comprehensive Retail Background Check

Although a background check is not a 100% guarantee against future wrongdoing, it still provides an important first line of defense. Knowing what red flags to look for and recognizing suspicious or concerning signs in a background report is a skill every hiring manager should develop. So, what should a retail store background check involve? 

The answer can vary slightly depending on the type of position where a new employee is needed. For example, someone who will mostly work stocking merchandise on the sales floor or assisting customers may not need the same scrutiny as someone handling the daily take from the cash registers during closing. However, even seasonal staff who will only be present for a few months should undergo screening. 

Let's explore the tent pole elements of a thorough retail background check and consider when each type of check is best added into the process.

Criminal history verification 

The cornerstone of the background check process, criminal record checks are what most people think of when they consider vetting in the hiring process. While a past criminal record does not guarantee that someone will commit wrongdoing again, it is an employer's right to understand more about those they plan to bring into the business. Though criminal background checks do not have predictive powers, they can provide important context to the hiring process that may encourage an employer to move forward or move on to a different applicant.

There are several kinds of criminal background checks, and the availability of records can differ from state to state. Generally, retailers should aim to use the convenience of far-reaching background checks to uncover as much potentially relevant information as possible. The Criminal Check at Check Xperts, a background screening company in Pakistan, is a detailed search across various criminal databases, locally as well as globally, ensuring accurate and trustworthy results.

Reference checks

Reference checks are crucial in the retail industry as they provide valuable insights into a candidate’s past performance and work ethic, helping employers make informed hiring decisions. Given the fast-paced and customer-facing nature of retail, employers need to ensure that new hires are reliable, trustworthy, and capable of handling day-to-day challenges like customer interactions and inventory management. Reference checks allow employers to verify the accuracy of a candidate’s resume, assess their soft skills, and identify any potential red flags that might not surface during the interview process.

By speaking with former supervisors or colleagues, employers can gather first-hand accounts of the candidate’s strengths, weaknesses, and suitability for the role. This additional layer of vetting ensures that businesses hire individuals who align with the company's values and can contribute positively to the team, ultimately leading to better customer service and smoother operations.

Drug screening 

Intoxication on the job can put coworkers and the public at risk. It can also impact productivity and negatively influence how others perceive your business. Habitual substance abuse could also be a risk factor for other business-related crimes, such as theft or fraud. Therefore, many retailers, even among the top ten largest employers in the USA, continue using drug screening as part of the hiring process.

Create such a drug and screening policy that makes the most sense for the business, but do not apply it unevenly across the workforce. The plan should not be to drug test one applicant, but to require the test of all prospective employees and evaluate the results based on consistent criteria.

Conclusion

For sectors like retail, where employees have direct access to products, customers, and money, welcoming the right employees onboard is extremely important. Being cautious helps to steer clear of the risks that loom over a company, as a misfit employee can bring an unimaginable amount of trouble, such as employee theft, losing customers due to poor customer service, a low productivity level, reputational damage, and more.  

With the help of proper retail background checks, owners can overcome such problems. Third-party background check companies, like Check Xperts in Pakistan, offer comprehensive background verification against tamper-proof sources and even generate results extremely fast. Get in touch with the team for more information.

F.A.Qs

1. Why are background checks important for retail businesses?
   The retail business is an extremely people-centered business, where the customer and the employee are close in contact. In such businesses it is quintessential to have employees who are totally committed to the job and can help improve sales. Thus, vetting of such employees is significant to avoid any mishaps. 
   
   
2. What are some common retail-specific concerns related to background checks? 
   The most common retail-specific concerns include: 
   Employee Theft, 
   Workplace Safety, Brand Reputation, 
   Customer Interaction
   
   
3. What should be included in a comprehensive retail background check?
   A comprehensive retail background should include the following checks: 
   Criminal record check 
   Drug check
   Reference check
   
   
4. Are there any legal considerations for conducting retail background checks?
   Yes, legal considerations for conducting retail background checks include adhering to the Fair Credit Reporting Act (FCRA), which requires employers to obtain written consent from applicants before performing checks and to provide notice if adverse action is taken based on the results. Employers must also ensure they follow "Ban the Box" laws in some states, which prohibit asking about criminal history early in the hiring process.