How to reduce retail theft?Did you know you were being robbed from? Here's how to tackle it. Premna Suzanne Jacob
We often hear crazy stories about how people manage to steal stuff from stores and sneak away. There was once an incident reported on how a ‘well known personality’ was caught shoplifting a dozen handkerchiefs from a store in France! Well, although this might sound funny, the loss faced by the retail industry every year due to theft is no funny story. In the retail world we use the word ‘shrinkage' to describe the reduction in inventory due to varied types of theft including shoplifting, employee theft, administrative errors or vendor fraud. According to National Retail Security Survey on retail theft, retailers lose 2% of their sales due to all the reasons mentioned above. This 2% amounted to almost $44 billion in 2014. Now that’s not a small amount. Huge losses are incurred by retailers every year due to these and hence, we need to understand how to keep away from thefts and improve security. Shoplifting Shoplifting was lagging behind employee theft, but it recently moved to number one position for retail shrinkage. Retailers report that 0.6% of their inventory is lost due to shoplifting. You must have even heard of ‘celebrity shoplifters’. There have been several cases even where notable personalities in the world have been caught shoplifting. There has even been an incident reported from Pittsburgh, Pennsylvania that the Dimperio’s Market, the only full-service grocery store in the Hazelwood neighborhood closed down because of shoplifters. Strict measures have to be taken to cut down the percentage of shoplifting. Some of those measures could be:
Be watchful of people who seem to show the following signs:
According to a global study conducted by NRMA ( National Resource Management Area) in 2008, shoplifters are 68% less likely to commit the theft if they are greeted soon after they enter the shop. So, the store personnel must be trained to monitor the customers closely and stay with them as much as possible. Many big retail companies like Walmart, Zellers, etc. have their store detectives dressed in plain clothes and acting as if they are real shoppers. This way they succeed in catching the shoplifters.
CCTV ( Closed-circuit television) and EAS( Electronic Article Surveillance) can be used to detect shoplifting. CCTV requires constant human monitoring. EAS refers to the electronic tag on the merchandise which causes an alarm to sound when the store is exited. Foot traffic information coupled with inventory and POS data can help you detect discrepancies or unusual inventory patterns.
Employee theft While 38% of retail shrinkage was accounted to shoplifting in 2014, 34.5% was accounted to employee theft. Following these steps will help you reduce employee theft at your store:
Hiring the right people would be the most important step towards avoiding employee theft. Don’t miss out on calling references, running background checks and having a detailed interview before hiring people.
Going through your company’s financial statements regularly will give you a clear idea of discrepancies, if any. This will also create a kind of alert situation among the employees too.
Use a POS system that tracks inventory automatically, so that you can get real-time information on your overall stock. Administrative Error 16% of retail shrinkage occurs due to this type of error. Simple pricing mistakes due to markups or markdowns can cause retailers huge loss of money. So, the most important thing you can do is:
Vendor fraud Although accounting only for almost 7% of retail shrinkage, vendor fraud cuts into a retailer’s financial account quite a bit. This happens mostly when outside vendors come to the store to stock inventory. The possible things they might do is failing to provide as many units as invoiced or stealing stuff. You can implement the following ideas to cut down on vendor frauds:
This gives you time and space to focus on one vendor at a time.
Keep account of each and every small detail like time, quantity, person who signed for it, etc. Make sure your store is completely secure and check on any action that might lead to losses at your store. Having an inventory management system is considered to play a good part in cutting down different types of errors that might lead to retail shrinkage. When your inventory management system is integrated with a good accounting software, it becomes all the more efficient.
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