Preventing Loss and Retail Shrink in Your Business
If you own a small retail business, the holidays can be your busiest time of year. During all that hustle and bustle it’s important to remain vigilant with your loss prevention strategy.
“Shrinkage” is a loss of inventory that should otherwise be present. The loss could be from shoplifting, employee theft, vendor or accounting errors, or damage. The 2020 National Retail Security Survey found shrinkage at an all-time high, accounting for 1.62% of a retailer’s bottom line, costing the industry $61.7 billion. Almost twice as many businesses reported shrink rates of 3% or higher compared to previous years.
So what can you do to prevent loss? Here are seven tips:
- Organize your store
Do you have disorganized or overflowing inventory? Are there corners with low visibility? You could be making it easier for would-be shoplifters to get away with swiping items from you. It’s hard to know what’s missing if you’re not sure where an item is supposed to go, so make sure there’s a place for everything and everything is in its place.
- Make surveillance devices and signage noticeable and clear
Hidden cameras might provide you with evidence of theft, but conspicuous and open cameras could deter it from happening. Make sure you have large, clear signage indicating that shoppers are being watched. After all, surveillance helps their safety as well.
- Greet and interact with customers
Encourage your staff to greet customers when they enter your space. Train them to offer help as customers look around. Reminding shoppers that there are people around is not only helpful. It can also deter would-be shoplifters.
- Watch out for return fraud
Return fraud can come in many forms. Customers might try to buy an item with bogus cash then return the items to get refunded real money. Customers may also buy an item identical to a broken model they have at home, then return the used item in new packaging to get a replacement at your expense. Train your employees to spot suspicious purchases and behavior and examine items closely. Don’t forget to train them how to handle the situation if they suspect a bogus return. Require IDs to accept a return. This can help you track habitual suspicious behavior and deter less-than-honest customers.
- Keep a close eye on your inventory tracking system
You should be watching your inventory. While some shop owners may be old-school, relying on pen and paper, a digital inventory system can give you real-time data. If you haven’t made the digital transition yet, there is no time like the present. A wise person once said, “If you watch the nickels and dimes, the dollars will take care of themselves.”
- Build a positive work culture
A healthy culture starts at the top. The leadership sets the tone to build a welcoming and friendly environment that encourages buy-in from staff. Your employees are your first customers. The more your staff cares about your business, the better care they’ll take of it and help recommend like-minded people when you need to hire more staff.
- Train, train, train
Training your staff well can help mitigate human errors, mistakes and therefore loss. The better trained they are at their jobs, the more effective and less distracted they will be. The more familiar they are with the product, the layout and where inventory goes, the easier it is for them to spot when something is amiss.
Some losses are caused by inventory shrinkage, but others are caused by unexpected and unforeseen circumstances. Whatever your business, make sure your investment is protected with adequate insurance coverage.
If you’re interested in getting a quote for the unique needs of your small business, call or visit BXS Insurance today! Get a custom quote today and get the coverage you need.
Sources: Small Business Administration, National Retail Federation, City of Houston, National Association of Shoplifting Prevention