Retail shrinkage is rampant in the industry. Business owners lose out on significant profits due to retail shrinkage, which consists of any money or inventory that is lost or missing, due to internal theft, shoplifting, vendor fraud, accounting errors, or other similar activities.
Preventing shrink is critical to the success of any retail store. When you’re faced with a difficult economy, changing consumer behaviours, and an increasingly competitive landscape, the last thing you need to worry about is shrink. But without a proper loss prevention system in place, your customers and employees can just siphon your profits right out of your store.
Retail shrinkage should not be just another part of doing business. With the right processes in place, it can be reduced or even eliminated altogether.
Here are the three rules for addressing shrinkage in your retail business.
The importance of strong leadership in the development and delivery of your loss prevention strategy cannot be understated. You must have leaders on staff who can effectively communicate a direction and a vision for loss prevention that others will follow. Your leaders must show genuine interest in reducing retail shrinkage, be able to effectively train your staff members and communicate how they can contribute to your goals, and create a climate of trust and collaboration that is perceived by your entire team.
Additionally, your leaders should be well-versed and experienced in loss prevention efforts and be able to implement a holistic approach that includes your board, front-staff employees, back-office workers, and vendors. Choose your leaders wisely, as their abilities and skill sets will be vital to your business achieving its goal of reducing shrinkage.
The Right Team Members
Your employees will be instrumental in your proactive practices against retail shrinkage. You must ensure that the team members you hire are honest and trustworthy. You must ensure that they have your store’s best interest at heart. Not only will hiring the right team members reduce your risk of internal theft, but employees who truly value loss prevention will take a more active role in preventing shoplifting, refund abuse, and other types of theft as well. Hire wisely and perform background checks.
Furthermore, you can strengthen your team by providing ongoing loss prevention education and training. Well-trained, shrink-aware employees will be your first line of defense against shrinkage, so arm your team with the knowledge and skills they need to identify and prevent it. The greater your staff involvement, the more successful your loss prevention strategy will be.
Integrating technology is one of the most significant things you can do to prevent retail shrinkage. When you automate your cash handling and inventory processes and procedures, you have better control over your assets and can keep them safer.
Cash recyclers and currency counters and sorters can take much of the cash handling activities out of the hands of your employees. This will ensure greater accuracy to reduce accounting errors and will increase accountability and provide untrustworthy workers with fewer opportunities to help themselves to your cash.
Additionally, cheque scanners and counterfeit detectors can reduce your risk of customer fraud. When your money is protected, handled, controlled, and reported by technology, you can significantly lower your store’s rate of retail shrinkage.
Don’t give up in the face of shrinkage. Preventable losses shouldn’t be considered a fact of doing business in the retail industry. With strong leadership, the right team members, and up-to-date technology, you can proactively prevent retail shrinkage at your store. Start addressing the problem today so you can keep more of your profits in your bank account. Your store’s profitability depends on effective loss prevention.