Your retail shrinkage rate is the accumulation of the losses you incur due to shoplifting, employee theft, administrative errors, vendor fraud, and other causes. The higher your shrink rate, the lower your profits.
Unfortunately, many retailers fail to notice their inventory and cash going missing—and thieves in all forms continue to take advantage of their lax loss prevention ways. To effectively reduce your shrink rate, you must confront it, pay attention, and take action to tackle the problem.
Consider these five things that you can do to tackle retail shrinkage.
1. Train Staff to Prevent Shoplifting
Well-trained and alert employees can significantly reduce the amount of shoplifting at your store. Employees who are trained can more easily identify potential shoplifters by being aware of the signs, such as customers avoiding eye contact, appearing nervous, wandering the store without purchasing, leaving and returning to the store repeatedly, and constantly keeping an eye on employees. Training your employees to greet all customers to make their appearance known, asking lingering customers if they need help, knowing where shoplifting is most likely to occur, and staying alert at all times can help deter shoplifters.
2. Spot Check to Prevent Internal Theft
Internal theft makes up about 50% of your retail shrinkage, so it pays to have a watchful eye on your staff. Stop by your store without warning regularly and randomly in order to keep thieving employees apprehensive. During these unannounced visits, spot check your inventory and registers. Pick a few products and do a physical inventory check against POS figures. Run a cash drawer reconciliation when possible. On top of regularly reviewing register transactions and keeping track of inventory, spot checks can deter internal theft. Let your employees know that you’re paying attention.
3. Encourage Anonymous Tips
Because you’re not always going to be at your store, you need to create a culture of loss prevention and encourage all employees to pay attention to employee theft. Encourage anonymous tips by creating a hotline where employees can leave messages if they suspect any of their coworkers of stealing inventory or cash. Not only will this help you catch thieves, but just knowing that their coworkers are watching and could report them could deter employees from stealing entirely.
4. Rethink Your Floor Plan
The layout of your store might make you more vulnerable to customer theft. If your shelving units are too high, they might limit your staff’s ability to watch the entire sales floor, making it easier for shoplifters to steal. Ideally, your employees should have a clear view down all aisles with no blind spots. You should also secure expensive items with security cables or in locked cases as well as limit the number of items displayed next to exits. Make sure lightning is bright as well. If you use security cameras, ensure that they’re trained on expensive items and potential blind spots, too.
5. Invest in Cash Management Solutions
Though some of your employees might abuse discounts and steal inventory, others can outright steal cash from the registers or cash room. Investing in cash management solutions can increase accountability and make sure every dime is tracked and recorded in order to deter theft. Cash management tools, like cash recyclers, counters, and sorters can also help keep your employees’ hands off your cash—the machines do the work, so your employees aren’t left alone with money in the cash room.
In addition, cash management solutions are 99.9% accurate, so you won’t lose out due to human error. You won’t have to worry about money being miscounted or misreported anymore. Solutions are also equipped with counterfeit detection technology as well, reducing your risk of accepting counterfeit cash. Cash management solutions can significantly reduce retail shrinkage at your store while also driving ROI.