Shrinkage is a common problem for many retail businesses - it is the culmination of losses as a result of employee theft, shoplifting, administrative mistakes, and supplier fraud.
Simply put, shrinkage erodes your profits - here are five ways to stop that happening.
Improper or insufficient cash and inventory management mean that many retailers are unable to identify and prevent shrink from occurring in their stores. But a business owner it is in your best interests to take a proactive approach to combating retail shrinkage so increase its profitability.
Closely monitoring the daily operations of your business will increase your awareness of where things are going wrong. It is only once you have identified the problem that you can take action to introduce solutions and reduce the shrink.
If the task seems daunting, here are some suggestions that might help.
Employee accountability can be difficult to maintain in retail where there is frequently a higher rate of staff turnover. Higher turnover rates contribute to the high rate of internal theft, which can account for 39% of overall retail shrinkage. Increasing employee accountability is one of the most effective tools in the battle against shrinkage in retail. To increase the accountability of your staff start by monitoring their cash management practices, as well as keeping up to date with cash totals and ensuring that each cash register is reconciling at the end of every shift. With a visible management presence throughout the day, it lets your staff know that you are interested and invested in the success of your business and reduces the opportunities for internal theft to occur.
Train staff to follow security policies and procedures
Training staff is a crucial aspect of any retail business to ensure that your policies and procedures are being followed. When it comes to security operations, staff should be knowledgeable in how to best prevent shoplifting and how to report instances of suspected shoplifting. Giving staff a crash course on shoplifting prevention—such as greeting every customer, watching for customers who avoid eye contact, asking customers if they can be of assistance, etc.—will go a long way to preventing shoplifting from occurring in your business.
Consider the layout of your premises
Some store layouts are more conducive to customer theft than others. If your store is filled with high shelving units and blocked aisles it makes it more difficult for your staff to monitor customers as they walk through the store. Ensuring that your staff have a good range of visibility throughout your store will deter customers from shoplifting.
Develop an environment of loss prevention
If everyone works together, loss prevention can become more effective. It is important to encourage your staff to care about preventing internal and external theft. Establishing guidelines and procedures for how your staff can report suspected theft will allow them to feel comfortable and confident in expressing their observations.
Invest in automated cash management technology
Automated cash management technology is one of the most effective ways to reduce shrinkage in retail. Cash management technology reduces the touches that you and your staff have with cash, increasing the security and efficiency of your daily store operations. Automation allows you to track cash as it moves through your store from transaction to processing and increases security measures. There are automated cash management solutions available to process transactions, count currency, detect counterfeit, and safely store cash. Ultimately, making the investment in automated cash management technology is an investment in the security of your business.