Among loss of inventory, administrative mistakes, and theft, retail shrinkage can put a big dent in the profitability of your business. Shrinkage is a common problem for retailers, but it is one that your business can work to prevent. Finding ways to reduce shrinkage in retail will allow your business to maximize its profitability.
When it comes to cash management, shrinkage can occur as a result of employee theft, external theft, or as a result of improper cash handling. If your cash management process isn’t up to par, it becomes difficult to identify and prevent shrinkage. Taking a proactive approach to preventing shrinkage is in your best interests; you can reduce shrink through close monitoring of your daily cash management operations so that you are aware of the areas of improvement for your business.
Once you have identified where the problems are occurring, you will be able to get back on track to profitability. Here we have outlined five simple ways to reduce shrinkage in retail so you can boost your profitability.
1. Train Your Staff
One of the pitfalls that many retailers fall into is not providing their employees with adequate training. Having well-trained staff is crucial to the success of your business, especially when it comes to following cash handling policies and procedures.
Staff should be knowledgeable about best cash handling practices and how to prevent shoplifting within the store. Provide your staff with the basics of shoplifting prevention such as greeting customers, asking customers if they can be of assistance, and identifyingcustomers who avoid eye contact. This training can give them the tools they need to help maintain the security of your business.
2. Boost Employee Accountability
With a higher rate of employee turnover in retail stores, it can be difficult to maintain employee accountability. When you consider that up to half of all retail shrinkage is a result of internal theft, it becomes apparent that boosting your employee accountability is one of the best ways to reduce shrinkage in retail.
To monitor employee accountability, ensure employees are following designated cash handling best practices and train employees who have not received training. Keep up to date with your cash totals by double checking to ensure that each cash register is balanced correctly at the end of the day. Lastly, having management staff visible on a regular basis lets your employees know you are available to help out and that you are motivated to maintain the success of your business.
3. Reconsider Your Store Layout
Pretend that you are a potential thief entering your store: Would it be easy to shoplift? Some store layouts make it easier for theft to occur. Large shelving units and crowded aisles make it difficult for staff to monitor customers as they make their way through your store.
Changing your store layout to increase the sightlines and visibility will deter shoplifting from occurring.
4. Foster an Environment of Loss Prevention
Loss prevention is a team effort; when all of your employees are involved, it becomes easier to tackle the challenge of preventing retail shrinkage. Encouraging your staff to care about preventing internal and external theft as well as following cash handling policies and procedures will go a long way to increasing the security of your store.
5. Make the Investment in Automated Cash Management Technology
Investing in automated cash management solutions is one of the best ways to reduce shrinkage in retail. Automation reduces the amount of contact your employees have with cash, which boosts the efficiency and security of your cash management processes.
There are solutions available to complete transactions, count and sort cash, detect counterfeit currency, and safely store your cash. Investing in automation gives you the power to reduce shrinkage.
