Inventory Control Is More Than Just Retail Theft Prevention

Does Inventory control involve more than simply retail theft prevention? It does but often that is the first thing retail managers look at when they are trying to determine causes of shortage. As a former Loss Prevention Manager I dealt with all of the areas that impacted shortage and worked to prevent those losses. There were issues related to theft and electronice article surveillance (EAS) was one of our methods of addressing that type of merchandise shrink. I made sure our store was tagging merchandise with hard tags and labels to deter and detect theft. I also ensured our Loss Prevention Team was staffed with personnel who would monitor the check lanes and front doors. I also had staff walking the salesfloor looking for shoplifters. While we made a significant impact on theft issues from our efforts to stop shoplifting to identifying and preventing internal theft, one of my largest recoveries of inventory had nothing to do with theft or fraud.
     

I will continue my story in a moment but I do think it is important to talk about electronice article surveillance because so much of the success we did experience overall was due in large measure to the effort we placed on theft prevention. An EAS system uses a combination of devices to deter and to prevent the theft of store merchandise. The operating parts use electronic article surveillance  technology to protect products. Labels are soft peel off tags that can be placed on a variety of surfaces including plastics, cardboard even shrink wrap. Hard tags are pinned to clothing or through materials and in some instances plastic blister packs. Both types of devices send out radio waves that are picked up by EAS towers if they come into range. A tower that picks up a radio wave sounds an alarm that resonates through a store. A trained employee will respond to an alarm and determine what caused it through a receipt check. If unpaid merchandise is recovered (which happens in the majority of alarm activations) most stores will offer an opportunity for the person with the merchandise to purchase it or turn it back over. Tagged product also deters criminals since they know it will sound an alarm. Often the shoplifter will simply leave rather than chance being caught. You can see now how EAS tagged merchandise impacts retail theft prevention. 

     

While our Loss Prevention team did make a significant number of deterred recoveries with the help of an EAS system and apprehensions for shoplifting I did make one very large recovery as I alluded to earlier. Our store had received our inventory results back and even though the results were good (well under 1%), I was not satisfied. I reviewed the detailed shortage results and one of the highest shortage departments was our shoe department. I knew some theft had taken place in this area we had made apprehensions of shoplifters and recoveries from the EAS system. We also occasionally found footwear that was old indicating someone had swapped out shoes. In spite of this I did not believe the shortage was primarily due to theft I believed the issue laid elsewhere. 
     

I opened the store’s profit and loss (P&L) statements for the past year. I took each month and carefully reviewed the weeks for that department. Eventually I came to a line that showed a large charge to the P&L for the department in question. There was no reasonable cause that I could attribute for the spike. There was no seasonal change that may have prompted this size of a billing and there was no plan-o-gram change that I could think of that may have instigated this size of a bill. I ran the spike past my store manager who forwarded it to Headquarters. It took some time and our inventory booked. A couple of weeks afterwards we had a post-inventory adjustment and our inventory results improved. My store manager said he had never in his 20 years in the company seen a booked inventory changed. We received a $10,000 adjustment in shoes. I had identified a billing error in our P&L that Headquarters could confirm was an error. 
     

I am proud of this paperwork recovery as it demonstrated that dollars are lost by more than just theft. However, if we had focused all of our efforts on paperwork errors and ignored retail theft prevention we would never have had the kind of results we did on a consistent basis. With an EAS and the use of hard tags theft can be significantly reduced and shortage kept low. Don’t lose sight of the other areas that impact shortage like administration and operations but to truly make a difference use EAS towers, labels and tags.

 

For more information about electronic article surveillance systems, contact us or call 1.770.426.0547