Retail Shrinkage: A Silent Threat
It happens every month. You’re at your monthly business review, and there is a gap when looking at your earnings numbers. Products listed as received never make it onto the shelves or disappear once they were put out. Once again, you’ve fallen victim to shrinkage—a near-constant loss of money and goods from businesses worldwide.
Retail shrinkage is costing your business, and it’s costing you. There are many possible causes of shrinkage. It could be as simple as a mistake or a shipping error, but unfortunately, the most common reasons are employee theft and shoplifting. It’s vitally important for companies, large and small, to take measures to limit shrinkage.
Sources of Shrinkage / Causes of Retail Loss
Several factors can contribute to retail shrinkage. Possible causes include shipping errors, misplaced stock, poor record-keeping, employee theft, and shoplifting. The best way to decrease shrinkage is to increase security. Robberies are the most dramatic causes of shrinkage, whether from an armed individual or a well-planned attack from a large group of individuals; the effect is the same, a violent loss of profits. But a far more prevalent threat is shrinkage from shoplifting and employee theft. The National Retail Federation estimates that shoplifting accounts for 36.5% of all retail shrinkage, and employee theft accounts for 43.9% of retail shrinkage in the U.S.
Shrinkage costs companies between 1.44% and 2% in lost profits. And depending on the size of the company, that could amount to many thousands, even millions, of dollars. Today we’re looking at practical ways to turn the tide on shrinkage and reduce the profit bleed. Some may shrug off shrinkage numbers at small at less than 2% on average. But if you had $500,000 in sales between your stores last year, it would be a loss of roughly $8,000. So, what’s the big deal? Ask yourself this, would you care if you had that same amount stolen in a single robbery? Of course. Many business owners just decide it’s part of doing business. But you don’t have to take it.
Practical Strategies to Combat Shrinkage
Fortunately, there are several actions business owners can take to limit shrinkage in their company. Let’s look at some of the best ways.
Surveillance cameras offer several significant benefits in deterring retail shrinkage. Their presence alone is a powerful tool to keep thieves both within and from without at bay, knowing their actions are monitored and recorded. Cameras provide evidence and can help business owners identify thieves. Cameras also help increase a sense of security for staff and customers. Surveillance cameras allow managers and store owners to monitor their retail stores in real-time, allowing prompt response to suspicious behaviors often before a crime has occurred. Cameras are a proactive security solution that helps businesses greatly with the problem of shrinkage in retail stores.
Another key to combating shoplifting and employee theft is ensuring that the store layout is designed with security in mind. The goal is to have a store design that provides employees and security cameras with a clear line of sight throughout the entire store. Minimizing blind spots and creating an open space discourages theft attempts by significantly increasing the chance that a perpetrator will be caught. Also, strategically place high-value items in well-lit areas or near cash registers.
A retail store’s access control system also plays a vital role in the fight against retail loss. By restricting and regulating access to the store and areas within the store, owners help ensure that only authorized employees have access to high-value areas such as stockrooms, offices, and areas where cash is handled. By limiting access to these areas, a store owner and managers will determine the likelihood that shoplifters or employees will strike these sensitive areas. An access control system also creates a log of who enters the premises, increasing safety by making tracking or investigating suspicious activities easier.
Employee Training and Company Culture
Both employee training and the overall culture in a retail store can help significantly to combat shrinkage. With proper training, employees can clearly understand store policies, procedures, and the potential consequences of stealing from the company. Training will also help inform employees about ethical behavior and encourage integrity, honesty, and accountability. Transparent company culture also helps promote a sense of trust, teamwork, and communication between staff and management.
Steps to Stop Retail Shrinkage
Big and small businesses must work diligently to stop shoplifting and employee theft. Doing this will be an ongoing challenge and will take a multifaceted approach to building an effective loss prevention strategy. A retail store has a fighting chance at combatting the scourge of retail loss by implementing a robust surveillance system, optimizing the store layout, installing an access control system, and properly training employees. A retail store can significantly reduce theft incidents with a preemptive approach, keeping open lines of communication, reviewing security measures, and fostering a company culture or integrity. In the battle against crime, the goal is to stay one step ahead of thieves and a commitment to constant improvement.
With advanced surveillance cameras and access control solutions, Life Safety can help you reduce shrinkage at your retail store. By following the steps outlined here and increasing security, installing surveillance cameras, installing an access control system that logs each employee, and fostering a culture of respect and integrity, a company will start to see a change almost immediately. To find out more, contact Life Safety Fire and Security Solutions at 1-800-263-1116.