It is important to understand the reasons you would have shrinkage. The most common reasons tend to be:

• 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.

Employee Theft

• 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 behavior.
• Do not be afraid to perform regular or random audits.  This will allow you to identify any discrepancies and suspicious behavior when the audits are taking place.  Audits will also discourage any employees attempting to steal.

Customer Theft

• Be aware of the signs.  Ensure all staff is fully trained to identify the signs of a shoplifter.  Have employees be aware of customers that avoid eye contact, are looking for cashiers and shop staff, have unnecessary bulky clothing, or enter with a large group need to be watched very closely.
• Get staff to acknowledge and welcome all customers coming into your shop, making them aware they are available if the customer needs anything.  Showing staff is always nearby can deter shoplifters.
• Always keep your store tidy.  If your store is organized 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 taking 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.

Administrative Errors

• Simple errors in paperwork and pricing can be costly to any store. 
• Ensure all staff is trained fully to reduce errors being made.
• Random audits can identify pricing errors on the shop floor.
• Make sure all paperwork is double signed so at least 2 people have checked it is correct.

Supplier Errors

• Always check the correct items have been delivered that were ordered from the supplier.
• Check the costing 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 utilizing the guides above and reducing your retail shrinkage.

Click here to look at our infographic "5 Key Areas to Focus on Retail Loss Prevention"