“Shrinkage” may seem like a small problem, but in the United States it adds up to $44 billion in loss annually, according to a University of Florida National Retail Security Survey.
Shoplifting, employee theft and supplier fraud combine to siphon away an average of 1.29% of retail revenues. The problem is even worse in discount and drug stores, where the average losses are 2.79% and 2.16%, respectively, Chain Store Age reports.
Shoplifters aren’t just kids swiping a candy bar. The average amount for a shoplifting incident is $50, according to risk management and inventory control consultants Jack L. Hayes International Inc. Organized retail crime targets all types of products that can be resold, from electronics to laundry detergent, according to the National Retail Federation’s “Organized Retail Crime Survey.”
For a company as big as Wal-Mart, shrinkage can be a multibillion-dollar problem, and its chief of U.S. operations recently flagged it as an urgent problem. But even a small or mid-sized business can’t afford to ignore shrinkage. In fact, the National Retail Security Survey says small businesses may experience more shoplifting than large retailers.
Even without a dedicated asset protection/loss prevention department, you can effectively deter crime cutting into profits by planning these actions:
- Hire carefully. In the United States, employee theft causes 43% of lost retail revenue—more than shoplifting, according to the Global Retail Theft Barometer. A study of 25 large retailers found one in 38 employees was apprehended for stealing from their employer in 2014, and losses in those cases averaged more than six times the amount lost in shoplifting incidents. You need employees you can trust not to steal and who will take loss prevention seriously. Calling references is a first line of defense, but you also may want to conduct background checks and drug tests to identify high-risk hires.
- Train thoroughly. Many of the same practices that create great customer service also thwart shoplifters. Greeting customers as they enter the store, observing them as they shop and offering assistance provides attentive service to honest shoppers, and uncomfortable attention to people trying to steal. For example, when people are looking at clerks and security cameras rather than merchandise, a simple “May I help you?” shows a potential thief they have been noticed. Staff members should also be aware of common scams, such as swapping price tags, so they notice when something may be amiss.
- Design for deterrence. Good lighting, displays below eye level and mirrors reflecting hidden areas allow staff to watch the merchandise and shoppers with greater efficiency, ADT advises.
- Stock shelves strategically. When products are lined up at the edge of a shelf face-forward, it’s easy to see at a glance if several are missing, security experts advise. Weigh potential loss against your customers’ ease of shopping when deciding whether to place high-risk items in locked cabinets or keep only a few on the sales floor at a time.
- Collaborate with community members. Sharing information about possible suspects, criminal activity and other observations with neighborhood police and other nearby vendors can be a valuable tool to keep everyone alert to possible criminals.
Even if you don’t think you can afford a high-tech solution, educate yourself about the options, from RFID tagging of merchandise to video analytics of self-checkout lanes, so you can decide if and when an investment in such technology makes sense for your business. An electronic supplement to watchful eyes will certainly free up staff time for greater staff productivity.