Most business owners understand that retail shrinkage is part of doing business, but many do not realize what actually causes the shrink that they are experiencing.  Knowledge about retail loss helps the business owner battle this profit-eating monster.

A major contributor to retail shrinkage is employee theft.  Many business owners think that shrink is just caused by shoplifting, but studies have shown that employee theft will actually cost the business more lost profit than shoplifting.  Employee cases of theft tend to be higher in value per occurrence than shoplifting.

There are ways that you can help prevent employee theft in your business.  Make sure you have an understanding of your inventory levels so you know when something is missing.  Stop into your business unannounced and at later hours.  Also, do not allow your employees to keep their purses or coats in their immediate work area.  Provide them a locker or an area where these items can be kept so that the opportunity to conceal merchandise is reduced.

Another type of retail loss is employees that help customers steal from your business.  An employee that has access to the cash register might not ring up all the items that the “customer” is paying for.  This is called “underringing”, and is a type of theft that can be difficult to detect.

Watch for customers that loiter near employees, or seem to wait for a certain employee to be available to help them.  These customers and employees may also appear nervous and may be watching other employees or managers.

Retail shrinkage will happen, but to what extent depends on you, the business owner.

For more information contact us: retail shrinkage or retail loss or call 1.770.426.256 – Atlanta Georgia

A business is not a business without retail shrinkage .  In today’s society business owners have to have their heads up out of the sand and face this unfortunate reality.

However, retail loss is not something that a business owner just has to accept.  There are solutions to this retail problem.

According to an Ernst and Young Study of Retail Loss Prevention, retail shrinkage costs retailers more than $46 billion every year. The majority of that loss is attributed to employee theft.  While shoplifters are more frequent in a business setting, the dollar amount per instance of theft is much higher for employees of a business.  Employees can steal more before being caught, because they are trusted.

Retail loss affects everyone.  Consumers have to pay higher prices to counteract the impact of retail shrinkage on a business.  If this type of shrinkage could be eliminated, businesses would be able to price their merchandise much lower.

Solutions to retail shrinkage can be found in loss prevention experts that know how to go into a business and analyze it’s every day business practices.

Loss prevention associates can identify shrinkage and develop plans to combat retail loss . Recoup your lost profit through a reliable loss prevention program, developed for your business to reduce retail shrinkage .

For more information on retail loss contact us at:  retail shrinkage or call 1.770.426.256. – Atlanta Georgia

In a perfect world, there would be no such thing as retail loss , shrinkage or theft.  And there would be no need for loss prevention, asset protection, employee theft investigations and security measures.  Businesses would not incur huge losses.  But, unfortunately, theft and loss in the retail environment is very real, and the issues must be dealt with proactively.

Do we live in a world full of thieves?  It would be nice to think that we do not, but there are a few bad apples among us.  There are plenty of people that a business may come in contact with that have every intention of gaining something for nothing – be it shoplifting, employee theft, or vendor fraud.  Who can argue with the possibility of a 100% profit margin?  That temptation alone often overpowers any sense of morals or decency that would encourage an individual not to steal.  This is especially true in tough economic times, as individuals struggle to make ends meet.  The temptation of a quick buck, or acquiring something desirable without spending any money, can often be too great to resist.

Businesses can combat retail loss in a variety of ways.  Training employees to know what to look for in a potential shoplifter is important.  Shoplifters do not want attention – so provide it!  An understanding of organized retail crime (ORC) is also important for managers and loss prevention professionals.  ORC thieves are involved in their own business of acquiring merchandise for resale.  Consider these groups competition, in a sense, except that your business is their supplier.  And you are supplying the merchandise free of charge.

Retail loss is an unfortunate part of doing business, but does not have to be the death of it.

For more information about retail loss or retail shrinkage contact us at retail loss or call 1.770.426.0547 – Atlanta.

In the world of retail loss and retail shrinkage in Atlanta this story that was recently published in the AJC really hits the nail on the head.

Arielle Kass, October 7, 2010
 
Sharla Jackson can rattle off a list of stores that have closed due to smash-and-grab crimes over the past three years.

Since July, a new state law has imposed tougher penalties on those convicted of smash-and-grabs, in which thieves bust through windows, walls, roofs or doors then snatch merchandise like jeans or flat-screen TVs to resell. It comes as the number of such crimes is the highest it’s been in years said Jackson, senior assistant district attorney in the Fulton County district attorney’s office and a member of the retail theft task force.
 
With 132 smash-and-grabs so far this year, the count is already ahead of 2008, when there were 130 instances in metro Atlanta’s five biggest counties.  Last year, there were 119 smash-and-grabs; in 2007, there were 97, according to the task force.
“They do it so quickly, it makes it difficult for them to be apprehended,” Jackson said. “They steal thousands of dollars of merchandise in a very short period of time.”
 
The latest happened Tuesday at Urban Outfitters on Ponce de Leon Avenue at North Highland Avenue. The chain declined to comment.
 
Metro Atlanta saw more than 300 incidents from 2007 to 2009, said Angelica Rodriguez, senior director of loss prevention for the National Retail Federation. The losses totaled more than $3 million, and Rodriguez said because not all incidents are reported to the organization, that is likely just the tip of the iceberg.
 
A new state law that took effect in July defined the crime and lengthened minimum sentences, ensuring that juveniles who are arrested for smash-and-grabs causing at least $500 worth of damage are subject to up to five years of custody. Adults who solicit juveniles for the crime serve between one and five years of jail time, and minimum sentences for participating adults were extended to two years.
It is still too early to know if the new laws will deter the crime, Jackson said, but she noted that the issue is a problem outside Atlanta’s city limits.
 
Smash-and-grabs happen “As far north as Dawsonville, up at the outlets . . . It’s not just an Atlanta issue, it’s an issue that affects so many businesses.”
Rodriguez, of the National Retail Federation, said thieves have moved on to department and electronics stores as boutique owners have enhanced security. Now, they also often target ATMs in grocery and convenience stores.
 
House of Adrene, on Peters Street in Castleberry Hill, had been hit several times at its old location, manager Erica Morton said. Since moving down the street in March, the store’s owner has taken measures to prevent the thefts, including locking up the denim that was a frequent target.
 
The crimes are worse in metro Atlanta than elsewhere, said John Heavener, president of the Georgia Retail Association. Jackson said that is because Atlanta has a large retail concentration and is near several highways. The stolen property can show up at flea markets, in online stores or on the street.
 
Small business owners don’t often have large security budgets, Jackson said, and are selling inventory so they can buy new inventory with their earnings. When those items are taken, they can’t pay to replenish their stock and repair the damage. Retailers hit more than once may be dropped from insurance, and Jackson said it can be impossible for a business to stay open.
 
“It’s a huge deal for retailers,” she said. “In a poor economy, you don’t want to have to pass those losses on to customers.”

If you are a retailer do not just sit back. Get involved. Join the Georgia Retail Association (GRA) and make sure your voice is heard on the smash and grab epidemic that is occurring. Prevent retail loss and retail shrinkage . You never know your store could be next.

For more information about retail shrinkage in Atlanta contact us at retail loss or call 1.770.426.0547

Retail shrinkage cancels millions of dollars in sales.  That means all of your hard work for an entire year can be wiped out by a single retail shrinkage loss.                                                            

Our goal as business managers is to get retail shrinkage and retail loss down to a manageable level. We will never eliminate it all together. However, we can push retail loss down and maintain it at a point where we can predict and budget for it.
 
What steps do you take to prevent retail shrinkage losses? 
                                            
Let’s examine some of the common inventory shrinkage problems:

• Pricing errors                           
     – Inaccuracy when pricing               
     – Low price on item                     
     – Incorrect tag on item
• Missing SKU/price tickets                
     – Sales at the wrong price cause lost profit                           
     – Extra time is involved in tracking down correct price
• Receiving errors                
     – Accuracy in counting                  
     – All items must be correctly piece counted
• Illegible or incorrect writing on documents                                
     – Written information must be easy to read                               
     – Information must be accurate
• Padding inventory                        
     –  Gives a false picture of the company’s profits
• Merchandise or product transfer                     
     – When a transfer is not generated, retail shrinkage is created for the sending store or unit
     – Incorrect transfers create retail loss
• Shoplifting                           
     – Makes a substantial impact and can add up quickly
     – Shoplifting must be accounted for through incident reports and then writing off the items                       
     – Losses also include empty packages, price tickets hidden in bathrooms, etc.
• Register discounts                       
     – Discount errors create retail loss 
     – Only management should authorize discounts                             
     – Management must insure the correct amount of discount is taken
     – Deception constitutes fraud
• Fraudulent or improper refunds/returns   
     – Evaluate each situation               
     – No receipt could mean possible shoplifted  
     merchandise                    
     – An associate’s best friend with receipt and no merchandise.

Retail Return Policy

                                           
A good return/exchange policy should contain the following items:                                 
                                            
A time limit for returns and exchanges should be made. For example, no returns are allowed after 30 days.

Require ID

If an exchange is given, the original item should be circled and noted on the customer’s receipt. A new receipt should not be given to the customer.

Receipts should be required (train the customer). If a receipt is not available, then ask for proof of purchase such as a canceled check or charge statement.              
  

• Voids                                    
  – The “number one” way employees steal cash                   
  – Associates void legitimate sales and steal the cash                       
  – Investigate voids without management approval
•  Fraud or improper use of time card     
  – Ghost “employees” created in order to collect pay                        
  – Clocking in or out for another employee  

For more information on retail shrinkage contact us at: retail loss or call 1.770.426.0547                        
                                                         

Three of the major contributing factors to retail loss are internal and external theft, and paperwork errors.  Paperwork errors are frequently the easiest to control and just require some thought and care to prevent.  Although this type of shrink would seem to be harmless – since the merchandise is not stolen – it is still a serious problem and a drain on profits.

 One of the major contributors to the large overall problem of inventory shortage –  retail shrinkage  – is carelessness and a lack of control over paperwork.

 What causes paper shrink and how can you help to control it?

• Receiving.  The receiving paperwork says you should receive 30 items, which you sign for, and you only receive 28.  Detailed receiving counts will avoid the loss of 2 items.
• Breakage, spoilage, items for company use, and other inventory adjustments.  Sometimes, physical items are removed from stock for legitimate purposes, only some of which are named here, with the intention of completing the adjusting paperwork later.  If we forget, the result is inventory shortage.  Complete the paperwork and process it immediately to prevent unnecessary  retail loss.
• Mispriced merchandise.  An item is carried in inventory at $10.00 and priced at $9.00.  Every time a sale is made, $1.00 is lost to shrink.  Any mistake when marking, changing, or recording prices can mean increased shortage, which means less profit.
•  Inaccurate counts.  At inventory time, when making price changes, or when transferring merchandise, incorrect counts mean unbalanced inventories, which contribute to shrink, which result in unexpected losses to the company.

 These are a few of the ways inaccurate, incomplete, or an absence of supporting paperwork can affect inventory.   There are many other ways, and you can probably think of more of them yourself.

 The way to solid inventory control is to assign jobs correctly; take time to avoid errors; and accurately complete the paperwork in order to complete the job.

 Retail loss caused by paperwork errors is preventable.

 For ideas on implementing an effective loss prevention program, go to  retail loss 

If shoplifting accounts as the second biggest retail loss area how do you combat it?

Training, Training and still more Training. If you are not training your employees how to prevent shoplifting you will never, ever succeed as a retailer. The key is the type of training. Do not put the main focus on apprehending the shoplifter.

Although this is important prevention is more profitable and will reduce retail loss in this area.

This prevention training involves the actual approach to a suspected shoplifter. It is easy and can be entertaining as you drive the shoplifter crazy and send them down the street to your competitor who is doing nothing but watching their profits walk out the door. The approach is simple and varied by each situation. Every store employee must be trained in this method, which should be made a job duty. Do this and you will decrease your shoplifting losses. You do not need to be a loss prevention or security expert to approach a suspected shoplifter.

Loss Prevention Systems has shoplifting training programs that are proven and effective. Don’t be the guy down the street that is watching their profits drain away.

Want more? Contact us at retail loss or call 1.770.426.0547

The University of Florida publishes an annual retail loss report that is considered to be the ultimate reference in the loss prevention industry.  They have identified five areas of inventory shrinkage/ losses which are: Administrative errors, Vendor Fraud, Unknown, Shoplifting and Employee theft.

Surprising to many at first is that employee theft is the primary source of retail loss.  Vendor fraud is mostly not even on a retailer’s radar but can account for 3 to 5 percent of annual losses.

Shoplifting is usually what comes to mind first when you mention retail loss.  This accounts for  around 35% of total retail shrinkage. 

One complication in calculating and categorizing these losses is that an unknown portion involves employees collaborating with shoppers and or outsiders.  This is called “sweet hearting”.  The employee running the cash register simply does not ring all items, or carries bar codes of inexpensive items and rings them instead of what is actually brought to the register. 

This bleeds into organized retail crime to a degree as well.  Organized retail crime is on the rise and is a serious threat especially to understaffed retailers.  A group or team will enter the store, one or more creates a distraction while others clean house.  The distraction can get very creative… everything from a scantily clothed female that strips to a false trip and fall. 

If you are suffering from retail loss and want help, contact Loss Prevention Systems today.