how to prevent stock loss in retail store

Retail loss prevention strategies

• Audit hiring and training practices. While the latest technology and tools can improve your operations, old-fashioned employee training is making a comeback.
• Institute clear policies. ...
• Create strong deterrents. ...
• Get buy-in. ...
• Hire a loss prevention manager. ...
• Strict accounting practices. ...
• Improve inventory management. ...

Full Answer

How can retailers improve their stock loss prevention strategy?

Measurement, collation, and comparison should be the starting points for any retailer looking to improve their own stock loss prevention strategy and this measurement should extend across all the various causes and contributors.

How to avoid stock loss from affecting profits?

To avoid stock loss from affecting your profits, you need to have effective and clear expectations and rules as part of the onboarding process, which can signal what’s considered inappropriate behavior. Enforcing some written expectations is more crucial.

Should your retail store hire a loss prevention specialist?

For many stores, it's easy to push crafting and enacting a loss prevention strategy off of one person’s plate … and onto no one’s. That’s why hiring someone whose primary role is to spearhead loss prevention efforts is an option worth considering, particularly as your business grows. Loss prevention jobs are common for retail stores at all levels.

How can you prevent inventory losses?

Good employees want to prevent inventory losses, but it’s your job to give them the tools and training they need to make it happen. Employee training to identify and stop shoplifting can make a big difference, reducing your shrinkage rate by as much as 70%.

How can you prevent stock loss in the store?

Retail Loss Prevention: 7 Powerful Tools & Technologies to Help You Reduce ShrinkageSignage. Installing security signs in your store is a low-cost way to deter shoplifters and shady characters. ... Cameras. ... Mirrors. ... POS system. ... Inventory management tools. ... Inventory counters. ... RFID.

What are 5 methods of loss prevention?

5 Loss Prevention Tools You Should Have Staff Awareness Training. ... Prevention Methods using Technology. ... Management Training for Internal Theft. ... Strive for Operational Excellence. ... Auditing.

What is loss prevention in retail store?

Retail loss prevention (also known as Retail asset protection) is a set of practices employed by retail companies to preserve profit. Profit preservation is any business activity specifically designed to reduce preventable losses.

How can stock losses be improved?

By improving your receiving and stocking processes, you can prevent damage to the stock coming in, which will help prevent/minimize stock loss. To improve the above processes, you need train your employees regarding the handling and storage of stock in the backroom or warehouse.

How do you control losses?

6 Essential Loss Control StrategiesAvoidance. By choosing to avoid a particular risk altogether, you can eliminate potential loss associated with that risk. ... Prevention. ... Reduction. ... Separation. ... Duplication. ... Diversification.

How are losses be avoided?

You must develop ways to evaluate losses, predict them and avoid them. In order to prevent losses, you should consider collaborating with other similar small businesses. You can work with other businesses on issues like audit practices, loss evaluation and using statistical ways of tracking trends.

What are the main causes of stock loss in retail?

The most common causes of stock loss for retailersShoplifting. ... Employee theft. ... Returns and refunds. ... Distribution. ... Pricing and paperwork mistakes. ... How can stocktaking help to remedy these issues?

What is the most common type of preventable loss?

These preventable losses, caused by human error or deliberate efforts, are known as “shrinkage.” Shoplifting and employee theft make up the bulk of a $61 billion annual problem for the retail industry.

What is the biggest deterrent to loss prevention?

Talk to your visitors Having active and aware employees can be one of the biggest deterrents against stealing.

What are the 10 reduce stock losses?

We have compiled a list of 10 ways to reduce stock losses;Use an EPOS system. ... Figure out who is stealing. ... Have security in place for both customers and employees. ... Train employees. ... Beware of scams. ... Use RF/RFID tags. ... Run a Live-stock system. ... Use employee sign-ins.More items...

How to prevent shoplifting?

Tactics to Prevent Shoplifting and Theft 1 Deliberate store organization: Aisles overflowing with disorganized merchandise are like a playground for shoplifters. They make it easy to grab any number of items without leaving a trace. After all, how can employees tell something’s missing when products don’t have a designated place where they should be? Keep your store well organized, and have employees restock and tidy up shelves regularly throughout the day. 2 Top-notch customer service: It’s good business sense to focus on great customer service – but it can also help deter would-be shoplifters. Regular customer service best practices (like greeting customers as they enter the store and adequately staffing the floor) serve a dual purpose. They let well-meaning customers know they’re welcome and can find help when needed, and they assure less well-meaning visitors that they’re seen. 3 Conspicuous surveillance and signage: Speaking of letting customers know they’re seen, it’s always good practice to have surveillance throughout your store. Conspicuous surveillance cameras, uniformed security, and signage making visitors aware of both are a powerful deterrent against shoplifting.

How does loss prevention affect employee theft?

By taking loss prevention into account during the hiring and training processes , you can make an impact on the two largest of those factors — shoplifting and employee theft. When it comes to employee theft, you might imagine store workers pocketing merchandise for themselves.

What is shrinkage in accounting?

Shrinkage is the difference between the value of your inventory on the books and the actual inventory in front of you. That’s your retail “shrink.”. For example, if your accounting says you have $100 in inventory, but you conduct a physical count and there’s $98 worth of inventory, your shrinkage is $2.

What is loss prevention plan?

The Basics of a Loss Prevention Plan. A solid loss prevention plan means more than sticking a few surveillance cameras in the ceiling. Your store (s) needs a top-down, strategic focus on loss prevention if you’re going to have a real effect on shoplifting and inventory losses. The Harvard Business Review studied the loss prevention tactics ...

Is it good to have surveillance in a store?

Conspicuous surveillance and signage: Speaking of letting customers know they’re seen, it’s always good practice to have surveillance throughout your store. Conspicuous surveillance cameras, uniformed security, and signage making visitors aware of both are a powerful deterrent against shoplifting.

Is shrinkage a problem?

Retail shrinkage is a huge, industry-wide problem. Retailers both large and small grapple with finding new and efficient ways to prevent shrinkage, particularly that from shoplifting and employee theft.

What percentage of retail losses is employee theft?

After all, employee theft makes up a sizable portion of annual retail losses — 30% to be exact. It can take many forms and run the gamut, and not all of it looks like the straightforward theft you might envision. Employee theft includes: Straightforward merchandise theft. Ringing up fake returns and issuing fraudulent gift cards.

What is the largest share of retail shrinkage?

Shoplifting . Shoplifting represents the largest single share of retail shrinkage, accounting for 36.5% of annual losses. When you think about shoplifting, you might picture someone walking out the door with a product tucked under their shirt — and that is part of the shoplifting problem. But it isn’t the whole picture.

How much does a shoplifter steal?

Shoplifters may steal items ranging in price from $1 to $1,000. They may work alone or in a group of thieves. They may strike once or come back every week. Shoplifting can take many forms and it can be a problem for any and every retailer.

Is shrinkage a part of life?

In the retail world, shrinkage is a part of life — but that doesn’t mean you have to settle for throwing away 2% of your sales each year. By developing a solid understanding of why and how retail shrinkage happens, you can devise a pragmatic and effective loss prevention strategy for your store.

Why is the supermarket shrinking?

For many high street retailers, the main cause of shrinkage is theft, however over 64% of supermarket shrink is directly caused by the absence of effective operations , such as incorrect inventory checks or inaccurate forecasts.

How much is shrinkage in supermarkets?

Shrinkage in supermarket stores is a major issue for many retailers, in 2019 alone, UK retail shrinkage accounted for almost £5.5 billion worth of goods. Shrinkage in supermarket stores is a major issue for many retailers, in 2019 alone, UK retail shrinkage accounted for almost £5.5 billion worth of goods.

What is the first point of call when planning a loss prevention strategy?

The first point of call when planning a loss prevention strategy is to collate all of the information surrounding any type of loss and break this down via location and product to see if there are any correlations to understand which products are the most highly targeted for theft, but also those that are frequently wasted.

What is inventory management?

Inventory Management – Many stores have an automatic reorder system that automatically places an order when a stock reaches its lower limit. However, many of these stores still have staff counting the inventory and inputting the data into a system, leading to frequent human error in the figures.

The importance of managing shrink in retail stores

Managing shrink in retail stores can be a highly complex balancing act. It is why after years of debate and discussion the industry is yet to agree upon a single shared definition of what shrinkage encapsulates.

1. Gather the right data and expertise

Measurement, collation, and comparison should be the starting points for any retailer looking to improve their own stock loss prevention strategy and this measurement should extend across all the various causes and contributors.

2. Adopt a systematic approach to management

Whichever cause of retail shrink they decide to focus on though, it is important to adopt a systemic take on management.

How to prevent stock loss from eating into profits?

To prevent stock loss from eating into profits, you need clear and effective rules and expectations as part of the onboarding process that will signal what is considered inappropriate behaviour from day one .

How to prevent grab and run theft?

Locate items of high value towards the back of the store and keep expensive products behind lock and key to minimise grab-and-run theft. Ensure all products are within view of staff, so your employees can prevent theft before it happens.

Why should valuable items be placed close to the till?

Valuable items should be placed a close to the till as possible for ease of surveillance. Shoplifters are less likely to act if they know surveillance is high. Secure stockroom- Ensure your stockroom isn’t easily accessible to everyone, even to all staff members in some cases.

Why do employees steal from their companies?

Your Employees – There are various reasons that employees steal from their companies from lowering prices for friends, dissatisfaction at work. A modern EPOS system can reduce this.

How to educate employees about retail theft?

Educating your employees about retail theft – It is important to educate your employees about the effects of retail theft on your business. Encourage employees to monitor people closely and be aware of suspicious behaviour.

What is the February issue of Appliance Retailer magazine?

The February issue of Appliance Retailer magazine contains a feature on stock loss and theft prevention. As part of that feature, David Hunt from Rozelle Electronics World provided six tips to help retailers minimise the amount of goods that go missing:

How to keep your house safe in winter?

2. Keep your small items away from the front door – especially if you’re not actually going to supervise that area – because people can just pick them up and walk out. 3. Look out for people who are nervous, or maybe they have large clothing on – particularly in the winter months.

How to avoid stock loss?

To avoid stock loss from affecting your profits, you need to have effective and clear expectations and rules as part of the onboarding process, which can signal what’s considered inappropriate behavior. Enforcing some written expectations is more crucial. Employees must be held accountable for their behaviors.

How to prevent stock loss from theft?

To prevent stock loss because of theft, you’ll need to control every step that involves the stock and improve your stock’s security like through address verification. To know more about this security solution, there are different websites that you can check out like https://www.lob.com.

How to avoid damage to a warehouse?

Another way to avoid damage is the smart placement of items. Place bigger items on the bottom of the shelves and make sure that they’re easy and safe for employees and customers to reach the items they like to access. In case you have a warehouse or a storage facility, schedule facility inspections.

Why is it important to repair a warehouse?

It’s essential since faulty warehouses frequently cause damage to the stocks that are kept there. Other than performing necessary warehouse repairs, make sure that the presence of fire prevention and detection systems are there at the storage or warehouse facilities that are prone to fire that may cause damage to stock.

Why do stock losses happen?

Stock losses happen due to damaged stock. By improving your stocking and receiving processes, you can avoid damage to the stock coming in that’ll help minimize or avoid stock loss. To maximize such processes, you have to train your employees about the storage and handling of stock in the warehouse or back room.

What is stock loss?

In short, a stock loss is a discrepancy between your accounting records and your physical inventory. If you’ve noticed a discrepancy between the amount exhibited in your record and the actual inventory on hand, then you might have suffered from stock loss. Various factors may contribute to inventory shrinkage or stock loss including employee ...

Why is it important to have rules written down?

Having rules written down also provides you a documented agreement to refer to if the staff violate workplace expectations like any consequences. But, give positive feedback when your staff does the right things.

Why is loss prevention important?

Loss prevention is important because it aims to maximize a business enterprise’s profits by better managing preventable losses. Retail shrink, a preventable loss in the retail industry, cost businesses a total of $46.8 billion in losses due to theft, shoplifting, error, and fraudulent activities. Loss prevention aims to proactively address this by ...

What is the most important contributor to loss prevention?

One of the most crucial contributors to loss prevention are the employees. The more aligned employees are with your loss prevention efforts, the more effective are your processes and systems in place to prevent unnecessary loss in the business. In retail stores and other customer-facing establishments, employees that are engaged with visitors not ...

What is retail shrinkage?

Retail shrinkage is the difference between what is recorded in the inventory and the actual inventory of the retail establishment. Shrinkage leads to loss of inventory which directly translates to loss of profits as it is something that cannot be sold anymore.

What are the three fronts of loss prevention?

Loss prevention best practices or preventive measures can be implemented on three fronts: processes and procedures, systems, and people.

What is the procedure that helps prevent losses?

Another form of procedure that helps prevent losses is the implementation of Business Continuity Plan (BCP) which aims to lay down proactive strategies for uninterrupted business activity even during emergencies.

What are the threats to digital businesses?

Digital and Cyber threats abound as businesses of varying sizes and industry are becoming more reliant on the convenience and interconnectedness brought by digital technology in running day-to-day operations. With the risk of penalties due to noncompliance with industry regulations on data security and the millions of dollars that could be lost to hackers’ ransomware, businesses need to work proactively and be better equipped with managing cyber security and data loss prevention.