Retail shrinkage is a common problem for many stores. Shrinkage is the culmination of losses that your business experiences as a result of employee theft, shoplifting, administrative mistakes, and vendor fraud. When your retail business has a higher shrink rate, your profits are reduced by that difference.
Improper cash and inventory management means that many retailers are unable to identify and prevent shrink from occurring in their stores. It is in your best interests as a business owner to take a proactive approach to combatting retail shrinkage so that your business can increase its profitability. Reducing shrink involves closely monitoring the daily operations of your business so that you increase your awareness of where things are going wrong. It is only once you have identified the problem that you can takes action to reduce shrink. If the task of reducing shrink seems daunting, here are five ways to reduce shrinkage in retail businesses.
1. Increase Employee Accountability
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 up to 50% of overall retail shrinkage. Increasing employee accountability is one of the most effective ways to reduce shrinkage in retail.
It is a good business decision to increase the accountability of your staff by monitoring their cash management practices as well as keeping up to date with cash totals by ensuring that each register is reconciling at the end of each shift. Being a visible leadership presence throughout the day lets your staff know that you are interested and invested in the success of your business and reduces the opportunity for internal theft to occur.
2. 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 about how to best prevent shoplifting and to who they should 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.
3. Consider Your Store Layout
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 attempting to shoplift.
4. 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.
5. 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, and safely store cash.
Making the investment in automated cash management technology is an investment in the security of your business.