Fraudsters, vendors, customers, and even staff are all responsible for shrinkage in today’s retail space. We’re sharing some tips to help you reduce shrinkage and increase profits.
If you suspect that shrinkage is an inside job, follow these steps:
Quality starts with people. Implement a policy of hiring people who share common values and who meet your high standards–not just skill-wise, but in terms of character. Run background checks, call up their references and be thorough with your interviews so you can effectively gauge if they’re the right fit.
A happy workplace encourages ethical behavior. Create an excellent environment by keeping communication lines open, promoting fair employment practices, and ensuring that everyone feels accepted and appreciated.
Regularly going through your company’s financials will enable you to spot discrepancies and suspicious behavior. It also discourages potential fraudster activity.
Vendor fraud, which accounts for about 5% of retail shrinkage, isn’t as common as shoplifting or employee theft. This is what you can do to decrease vendor fraud:
When dealing with vendors, get everything in black and white. Log all the delivery and shipment details, i.e. time, quantity, the person who signed for it, etc. so that you’ll always have documentation to refer to.
See to it that whoever signs for shipments knows your products and your vendors well. This will make it easier for them to pick up irregularities and inconsistencies.
This enables you to stay focused on one vendor at a time and see to it that everything’s in order.
The pointers mentioned above will help you prevent specific types of theft and fraud. At a more general level though, here are additional retail security tips to help you prevent loss across your business:
The first step to reducing shrinkage to measure it; and you can’t do that if you’re not on top of your inventory counts. It pays to conduct stock counts on a regular basis. See to it that every item in your store is counted at least once every quarter so you can catch discrepancies early and take immediate action.
In addition to shrinkage, keeping an eye on metrics, like comparable sales and returns, will allow you to spot trends and uncover suspicious behavior. For example, have your rate of returns been unusually high lately? You might want to investigate.
Loss prevention tools such as cameras, signage, and mirrors can prevent shoplifting and employee theft.
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