How to Reduce Shrinkage in Retail
The annual Global Retail Theft Barometer, underwritten by Checkpoint Systems, shows that in UK shoplifting accounted for 26% of all inventory loss, while retailers saw £770m stolen by employees and an additional £300m lost as a result of supplier errors.
Globally, UK stores had the worst level of administrative and non-crime losses with 40% of all shrinkage coming as a result of internal errors, such as mistakes with pricing.
As the figures above show, it is incredibly important to be in control of your shrinkage at all times. It is important to understand the reasons you would have shrinkage. The main reasons are:
- Employee Theft
- Customer Theft
- Administrative Errors
- Supplier Errors
Shrinkage is one of the top reasons for a reduction in profit and finding a way to reduce theft (employee or customer) and administrative errors (internally or from suppliers) will protect the profit of your business.
The following is a guide on how to reduce your losses.
- Employ the right people, check, check and check again. Confirm their employment history, always check references and check they have the right character for the job.
- Communicate with your staff. Always make them aware of your stringent no theft policies, talk to them about any issues they have and always get feedback from your staff. A happy workplace always encourages ethical behaviour.
- Do not be afraid to perform regular or random audits. This will allow you to identify any discrepancies and suspicious behaviour when the audits are taking place. Audits will also discourage any employees attempting to steal.
- Be aware of the signs. Business owners need to ensure all staff are fully trained to identify the signs of a shoplifter. Have employees be aware of customers that avoid eye contact, are looking at cashiers and shop staff, and have unnecessary bulky clothing. Those entering with a large group should be watched very closely.
- Getting staff to acknowledge and welcome all customers coming into your shop, making them aware they are available if the customer needs anything. Showing staff are always nearby can deter shoplifters.
- Always keep your store tidy. If a store is organised it is much easier to spot if something is missing. Ensure high value items are always in sight and not in a blind spot.
- Be aware of the data. In-store data can improve your store security by establishing if customers linger in certain areas from CCTV and your inventory data and POS data can identify anomalies and unusual inventory patterns leaving the store.
- Be efficient with any returns. Have a visible returns policy and always ask for proof of purchase to ensure customers are not returning stolen items.
- Simple errors in paperwork and pricing can be costly to any store.
- Ensuring all staff are trained fully to reduce errors being made.
- Random audits can identify pricing errors on the shop floor.
- Making sure all paperwork is double signed so at least 2 people have checked it is correct.
- Always check the correct items have been delivered that were ordered from the supplier.
- Check the costings on the paperwork are correct.
- Also check what is going back to the supplier matches the paperwork.
- If you have perishable items always check the sell by date is in date to give you time to sell the item.
- Install security systems within delivery areas to discourage thefts from deliveries or returns.
Always protect your inventory and your profits by utilising the guides above and reducing your retail shrinkage.