The 2008 University of Florida study shows that inventory shrinkage or “shrink” is significantly higher at 1.51% from the all time low of 1.44% in 2007. Keep in mind this is 2008. So it is reasonable to assunme that 2009 will be worse because of the economy. Sources of inventory shrink nationally are as follows: 42.7% Employee Theft, 35.6% Shoplifting, 15.4% Administrative, 3.7%Vendor Fraud and 3.9% unknown.
Employee theft is still at the top of the list. We have found in our work that this holds true for non-retailers also.
On the shoplifting front projections are that there will be an increase in loss due to the ecomomy and Organized Retail Theft (ORT). By the way, 71% of all shoplifting is attributed to Amateurs.
What does this mean to you? Retailers and business of all types are subject to employee theft. Do not wait to get your policy and procedures in line and enforced. Chances are you are losing money somehow right now. Get it fixed!
Some areas that you should look carefully at include:
Accounting and Bookkeeping-Are there enough 2 party controls in place? Is an audit or review of critical functions such as AP and AR being conducted? We have found employees stealing money from these areas by processsing charge card credits to their personal accounts, creating phony invoices and then voiding them upon receipt of payment.
Refund and Void Controls-Are two employees required as the return is being processed while the customer is still there? Do you have key or password control on the refund and void function?
Receiving Controls-Who is doing this? Is there some check and balance? A manager should “audit” every shipment by spot checking a few items. Let’s keep the employee and vendor honest.
So you have a store that is too profitable, and you want to increase your losses, what do you do?
One of the easiest ways to lose merchandise and profits is to invite shoplifters into your store.
Shoplifters come into stores where it is easy to steal. You can get a reputation as a store that is easy to steal from by totally disregarding every customer who enters! When he or she walks in, don’t even look up from what you are doing to acknowledge or greet the customer in any way. That way, the potential shoplifter will feel more at ease.
Next, as the shoplifter appears to be browsing, continue to ignore him or her and keep doing your stock work or paperwork, or even go back in the stockroom out of sight. This will give the shoplifter ample time to select and conceal merchandise without fear of being detected.
Arrange your displays so that there are lots of areas to hide behind and are out of the line of sight of the sales counter.And finally, place all your small and most expensive merchandise far away from the counter. Near the exit door is best.
By following these simple guidelines, you can help increase your store’s losses and reduce profit.
And by ignoring all customers, even the legitimate ones will want to stay away and shop somewhere else.
But if you’d rather avoid shoplifters, please and satisfy your customers, simply pay attention to each customer that enters your store, make everyone feel welcome, and provide genuinely great customer service to everyone.
Since shoplifters come in all shapes, sizes, colors and ages, how can we prevent them from taking advantage of us?
We don’t know who is a potential shoplifter and who isn’t. First of all, most people are not shoplifters, so they shouldn’t be made to feel like one, so we’ll look at the more subtle ways to prevent this crime from happening in the first place.
Look at the arrangement of your store. Are there out of the way areas or blind spots where even the most casual shoplifter might be tempted to conceal some goods? Arrange fixtures to maximize the view from the register area or other areas where staff are present.
Know your merchandise so that someone intent on changing price tickets or barcodes will have another obstacle to overcome – a knowledgeable associate. Be sure all merchandise is correctly marked and priced.
Keep shelves, bins, and racks full. Arrange merchandise so that you will know when any is missing. Keep expensive, small, desirable items like designer sunglasses under lock and key. When demonstrating them to a customer, limit the number that are out of the case so that you can keep up with them. This will deter the casual thief, and your customers will understand.
If you use fitting rooms for customers to try on clothing, be sure to keep them clear of merchandise, hangers, and tags. This lets the shoplifter know that the associates are on top of their inventory, knowing what goes in and what comes out.
The most important deterrent to a shoplifter is exceptional customer service. Acknowledge each and every customer as they enter you area and anticipate their every need. A conscientious and alert employee is the single most effective deterrent to prevent shoplifting.
