For example, a sweater tag shouldn’t be easy to tuck away in a sleeve. That type of nuanced conclusion is only possible though when armed with clear, granular detail on all the different types and causes of shrinkage in the first instance. A useful piece of advice here is to create a template that is simple and easy to access by everyone. This can either be done through a common Google Sheet or a project management tool like Asana. Since the plan may require authorization from several stakeholders, including investors, you should start by explaining what you are about to present, and possibly create a short abstract. Of the 10 million people caught shoplifting in the last five years, there are 17 million people that got away with the crime.

Armed with a clearer view of both their individual levels of shrinkage and where this sits within an industry context, retailers should be able to build up a picture of where their shrink reduction efforts are most needed. All of the above are effective shrink reduction strategies that you can implement to greatly reduce shrinkage in your retail business. Effortlessly monitor an employee’s progress through the training material with real-time oversight and notifications. Create customizable quizzes with real-time data to ensure employees have retained the knowledge gained from the theft prevention training.

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These are the business policies in your company and the standard operating procedures you implement in operations that work together to foster an environment that deters activities that could lead to losses. All these steps and tactics will contribute to a high-performing loss prevention program. But real success cannot be achieved without an organizational alignment on top priorities, a strong work ethic among team members, and a degree of flexibility for the inevitable change that comes with a growing industry. Vendors cause as much as 20 percent of shrinkage, according to estimates from the National Association of Convenience Stores published on the city of Jefferson, Mo., website. City officials recommend requiring packing slips for each delivery, on-the-spot checks of quantity ordered and received before any stock moves to the floor and double-checking all invoices. Other steps to prevent vendor fraud include never allowing a vendor to remove empty boxes or loiter in the building.

But there are other common types of inventory shrinkage that retail industry businesses owners must be aware of. By conducting frequent inventory audits, your employees will understand the importance of that inventory to the business’ success and bottom line. Furthermore, management can conduct more frequent, even daily, inventory audits on smaller amounts of inventory to keep employees on their toes. This type of audit is called “cycle counting” and it’s a great way to stay on top of inventory on a regular daily basis. With retail crime on the rise, retailers cannot only rely on law enforcement to punish offenders after the fact. By identifying retail crime patterns, adding new security layers to known problem areas like self-checkouts and monitoring for known signs of retail crime, today’s retailers can stay one step ahead of shoplifters.

Use an all-in-one system for less admin errors

Learn how an accurate, well-structured inventory management system can help you increase turnover, reduce markdowns and improve customer service. Electronic article surveillance is a technological method for the prevention of shoplifting from the retail stores or pilferage of books from libraries. These tags are removed or deactivated by the clerks when the item is properly bought or checked out. At the exits of the store, a detection system sounds an alarm or otherwise alerts the staff when it senses active tags.

The even better news is that profit preservation does not have to be a large, expensive, time-consuming project. You can start by simply enhancing return policies, adjusting POS policies, , or even just updating property trespassing policies. However, the bigger picture is understanding the areas where shrinkage is occurring so that you can take the proper steps to prevent it from happening in the future.

• Make sure employees are aware of all the different types of criminal scams, like a client returning items without receipts or a child distracting sales clerks while someone is stealing merchandise.
• Like we said in the beginning, don’t make yourself an easy target for organized retail crime.
• For instance, if you own a lighting store and a customer fumbles a delicate lamp you have on display and accidentally breaks it.
• Find ways to increase employee morale so they’re less likely to engage in theft.

This is where you’ll show how this issue currently affects your business. Take your career to the next level by learning business and finance basics, and developing an enterprise mindset. Ideally, you want that number to be as close to zero as possible. While 1.38 is trending downward and that’s a positive sign, there’s still room for improvement.

The Future of Retail Starts with a New Approach to Preventing Shrinkage

https://1investing.in/ in supermarket stores is a major issue for many retailers, in 2019 alone, UK retail shrinkage accounted for almost£5.5 billionworth of goods. There are various reasons why shrinkage can occur; theft, administrative error or those puzzles that just can’t be solved, referred to as unknown cases. Cycle counting is more of a warning system than an inventory shrinkage deterrent in and of itself, however. It helps you pinpoint where shrinkage may be happening and if you need to invest more in your loss prevention strategies.

Thentalk to the retail experts at ArcherPointabout how we can help with technology. Is there a perfect go-to product or profit preservation strategy? That depends on your business—or more specifically, the item or item category. That might mean starting with the policies or on a broader prevention level. Supplier or vendor fraud, like “lost” cargo during transit, is another issue.

To have a successful LP plan, you’ll need to get your employees on board. When vetting candidates, conduct criminal background checks. Additionally, look for candidates who’ve demonstrated honesty and level-headed decision-making in tough situations.

Quiet areas are best, but you want to be sure they’re also well-monitored. The prioritization of a culture of innovation and experimentation was also apparent. These organizations are not afraid to try new approaches and technologies if they think they will help to tackle the problem of stock loss. Indeed, most of them wanted to be seen as trailblazers and thought leaders in this field.

Andrea holds a bachelor’s degree from the University of Western Ontario. She enjoys travelling and has a passion for personal fitness, including obtaining her kettlebell certification. Andrea lives in Toronto with her husband and two young sons. Finally, they had all invested in employing data analysts to get the most out of the available data and to ask difficult questions and perform deep dives on the data.

Retail shrink, a preventable loss in the retail industry, cost businesses a total of $46.8 billion in losses due to theft, shoplifting, error, and fraudulent activities. All were clear that any new intervention needed to be carefully piloted and measured before any subsequent decision on companywide roll-out was made. Without these three strategic-level factors, any loss prevention approach will flounder on the rocks of diffidence, marginalization, and under-prioritization. Getting a broader organizational framework that is conducive to taking loss prevention seriously is imperative.

“It could be as simple as daily awareness and auditing around the POS, checking to make sure that all sensors are removed, or talking about one LP point at every shift meeting,” she says. If LP is a major priority and your budget allows, you might even hire a loss prevention manager to oversee it entirely. We’re not talking about branded signage — instead, signs that reiterate your policy on dealing with shoplifters and the LP measures you currently have in place can dissuade shoppers looking for the five-finger discount. One study found that anti-theft signs with the word “BEWARE” in big, bold letters are most effective in deterring thieves. Cameras and mirrors, as discussed previously, help, and they should be placed according to your store layout. Surprising for some, how you design your physical space also impacts theft.

Managing retail shrinkage is a complex art that needs to be strategically planned. So, a stock loss prevention strategy needs careful consideration, comparing the loss of value with customer experience. The loss prevention teams were also good at using communication to influence different parts of the business, particularly through the provision of statistical data on a regular basis. It’s important to understand from the outset therefore that reducing shrinkage in retail requires a constant and careful balance of these two dimensions. Any effective stock loss prevention strategy must aim to reduce loss to the lowest possible levels without impacting the overall shopping and purchasing experience, i.e. without sacrificing any potential value. It is important to understand from the outset therefore that reducing shrinkage in retail requires a constant and careful balance of these two dimensions.

Preventing shrink in retail stores: Stock loss prevention strategies

And while a POS system can help you track inventory at the point of purchase, it can’t track stock items that aren’t purchased. These are calculated acts of theft by employees or shoplifting criminals and the two areas costing you the most money. But, there are also ways to can gain more control over these areas by taking actionable steps to help minimize your risk of shrinkage.

There are several common types of inventory shrinkage in the retail industry. According to NRF, the most common type of shrinkage is “shoplifting has again surpassed employee theft as the leading cause of shrink for the fourth year in a row. Still, simple shoplifting continues to drop, down to 35.7% from its 2016 high of 39.3%”. Daily tasks and checklists ensure that employees know exactly what to do when arriving to work. This reduces human error and can greatly reduce inventory loss and shrinkage. We understand how overwhelming all these tasks can become for one business owner or retail store manager.

It offers stretail shrinkage action plangic direction, outlines roles and responsibilities, and monitors the sales team’s progress. Hubspot has a great post that helps you create a sales plan from scratch. Considered an “outside” occurrence, organized retail crime is where groups of people work together to take a retailer’s merchandise without purchasing those items. A common pattern is where teams target the same brand at multiple locations—for example, you are a retailer who has two locations that are both hit on the same day at around the same time—or they target multiple cities. Another scenario that’s becoming more prevalent is where crime teams study a retailer’s warehousing trucks, targeting their internal deliveries. Along the same lines as security cameras, all retailers should implement an Electronic Article Surveillance system in their stores.

Place small, easy-to-steal items in displays that are harder to reach. Physically speaking, it’s important that a staff member always have an eye on the register in addition to any cameras or surveillance devices. Leaving a till unattended puts you at further risk, and opportunistic shoppers could take advantage of the situation. Clearly define how you’ll pick SKUs to count each week and write out the steps for cycle counting employees.