Shrinkage is an unfortunate reality for many retail stores. Shrinkage can quickly accumulate once you consider all of the losses your business experiences as a result of shoplifting, employee theft, vendor fraud, and administrative errors. The higher your shrink rate, the lower your profit margins; thus, it pays to find ways to reduce shrinkage in retail!
It can be difficult for retailers to determine where shrinkage is originating in their businesses due to improper inventory and cash management. Since you can’t stop a problem from happening if you are unable to identify the source, it is in the best interests of business owners to analyze and evaluate their cash and inventory handling practices to find any trouble spots. Once the problems become apparent, you can find ways to reduce shrinkage in retail by taking steps to improve your cash and inventory management. If you don’t know where to start, here are five surprising ways to reduce shrinkage in retail.
1. Improving Employee Accountability
Retail stores are notorious for high rates of staff turnover, making it difficult to maintain employee accountability. When employees cannot be held accountable for their errors and actions, your business may experience higher rates of internal theft. Internal theft can account for up to half of all retail shrinkage; reducing internal theft should be a priority for any retailer. By increasing accountability within your workforce, you can reduce shrinkage in retail.
Employee accountability can be increased by monitoring the cash management practices of your staff and ensuring that you are well-informed on how each cash register reconciles at the end of each day. Having a visible leadership presence throughout your store improves staff accountability as it demonstrates that you are invested in the success of your business.
2. Training Staff on Security Policies and Procedures
Policies and procedures are only effective if they are put into practice. Training your staff is the first step to making sure that all established policies and procedures are being followed. It’s extremely important for your staff to be informed about your security policies so that they can prevent shoplifting and report instances of suspected shoplifting. Giving your staff quick and easy tips to prevent shoplifting—such as watching for customers who are avoiding eye contact, greeting each customer, and offering their assistance to every customer—is an effective way to reduce the occurrences of shoplifting in your business.
3. Introduce an Effective Store Layout
Store layout can play a huge role in preventing customer theft. Certain fixtures, such as high shelving units and aisles blocked by large displays, will make it difficult for your staff to keep an eye on customers as they shop in your store. Maintaining an open floor plan with maximum visibility is one of the ways to reduce shrinkage in retail that will discourage customers from shoplifting.
4. Encourage a Culture of Loss Prevention
Loss prevention works effectively when everyone in your store works together. Encouraging your staff to care about preventing both external and internal theft will allow you to establish a strong culture of loss prevention. Provide your staff with the tools and knowledge they need to succeed so that they feel confident in raising concerns about potential theft.
5. Add Automation into Your Business
Adding automated cash management technology is also an effective way to reduce shrinkage in retail. Cash management technology is effective as it reduces the amount of contact that you and your staff have with cash; this increases both the efficiency and the security of your store. Automation tracks your cash as it makes its way through your store from the initial transaction to processing. There are a variety of cash management solutions available to complete the transaction process, count and sort currency, detect counterfeit currency, and securely store your cash.