Being Cheap In The Short Term Can Hurt Retail Theft Prevention In The Long Term
Over the past 6 months one of the two vehicles my wife and I own had started making some very disturbing noises. It was purchased as a used vehicle but because the price seemed right at the time I did not take time to look at vehicle reviews or do any research on this particular make and model. I did not bother with an extended warranty either which would have cost me an additional $2,000. As the problems persisted and got worse, I went online and started to look at reputable websites and consumer reviews. Low and behold, many other owners reported similar problems with the transmissions on this year and model of car. Stupid me, I should have done the research in advance, even when the deal seemed good to me. How many times do retailers make similar short sighted decisions? The cheap way may seem to be the most cost effective, but is that necessarily true? Does it make sense when operating a store to try to save money by not spending any on retail theft prevention measures? How many times do stores reduce payroll in an effort to save money? How much research is done prior to making these types of decisions? What may seem like a great way to reduce expenditures may actually cost money in the future.
Retail theft prevention comes in many forms, from installing closed circuit television (CCTV), installing a Checkpoint security system with electronic article surveillance technology and even staffing a store with enough people to provide ample customer service. It also includes the proper training of staff on how to detect and deter shoplifting while still promoting customer service. Sometimes theft prevention includes hiring professional Retail Loss Prevention Associates who can conduct receipt checks at doors or catch and prosecute shoplifters. Different strategies require different levels of investment and levels of commitment. The amount to invest in retail theft prevention is an individual choice and has to be balanced with the annual sales for the store and how much merchandise shortage will be an “acceptable” level of loss. Bear in mind that merchandise shortage includes shoplifting, dishonest employee activity, vendor shortage and administrative shortage with shoplifting and employee theft accounting for about 80% of all losses.
So what happens when a store owner decides on a means of merchandise protection? What kind of assumptions come into play in the decision? Obviously cost is the first thing that is going to be considered. What will it cost me to install cctv or a Checkpoint Security System? How many people do I hire to properly meet the needs of my customers, ring sales, stock freight and do I include Loss Prevention staff? All of these are important considerations, a children’s gently used clothing store probably does not need the same amount of security or staffing as a jewelry store would need. This does not mean theft will not occur it will be a difference in the cost of each loss and what it will take to recoup the loss. Unfortunately, what often happens when sales stagnate or shrinkage begins to impact profits, rather than look at the root causes of those issues, owners and managers begin to look for ways to reduce expenses. If they use Checkpoint Systems they may reduce the number of sku’s they protect by tagging fewer items. I have seen companies that have Loss Prevention staff reduce the hours and the number of people in those departments, at the cost of increased theft. Then there are the sales floor associate hours that are trimmed. Sure, it seems like it will save money, but if your merchandise protection strategy includes customer service to deter theft (and drive sales) trimming those hours hurts a company twice.
Being careful when looking at expenses only makes sense. No business can last long if money isn’t being spent wisely. On the other side of that coin, when sales start to flag, a company needs to look at all of the factors that may be contributing to the problem. Has a new policy been implemented? Is the weather played a part? Are merchandise lines being discontinued that were popular? When was the last time a new sales display or endcap set up? There are many things that can impact sales and cutting corners to save a few dollars may wind up costing you more in the long run. Before you start cutting things such as staff hours, Checkpoint Security System budgeting, or even reducing store hours, make sure you look at the big picture. Sometimes it is easier to look at the quick fixes rather than analyzing the external influences.
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