Loss prevention tips for retailers
Globally, retailers are facing significant headwinds. They are attempting to recover from the effects of the pandemic, and at the same time, major supply chain issues and bottlenecks are affecting that.
Retailers are grappling with serious labour shortages as well.
All this means the last thing they can afford is substantial inventory losses stemming from situations like shoplifting.
It’s a critical time for retailers of all sizes to be aware of the threats facing them and to assess or re-assess their current security and loss prevention strategies.
The following are things to know about loss prevention in retail right now and how to modernise your prevention efforts.
Recognise the threats
When discussing threats to retail in terms of losses, one of the first we often think about is shoplifting.
External threats or shoplifting can include simple theft, such as stealing items. There are also more complex external threats, such as returning stolen items for cash or store credit or the use of counterfeit money.
Internal theft is another issue. Employee theft is on-par with external shoplifting in terms of prevalence in many cases. For example, it’s estimated to cause more than one-third of inventory shrinkage.
Theft by employees can include taking items without paying for them, taking cash, processing fake returns, giving phony gift cards or intentionally leaving things off orders.
A third point of risk globally is administrative error. These account for more than 20% of all retail shrinkage. If you’re a business relying largely on manual processes, this is a more significant risk for you.
Supplier fraud happens, but it’s not considered a major or common reason for inventory loss overall.
Shrink costs businesses around $100 billion every year.
So, what can you do?
Physical security
Some of the most effective things you can do to prevent inventory loss relate to physical security. For example, using security cameras is easy and relatively inexpensive, as well as being effective.
Cameras should be located at all retail PoS terminals, as well as at store entrances. It’s also advisable to include cameras in loading and delivery areas.
When you use video recording to analyze foot traffic and how customers move in your store, you can reduce theft by a significant percentage.
Mirrors are another cheap, helpful element of physical security that tell people in your store that you are monitoring for theft.
Hiring security staff might be one of the most effective elements of physical security compared to every other option.
You can hire a third-party security company specialising in the prevention of retail theft or a single security guard.
If you are going to use physical security measures, you should make them very visible. You want people to know that you take shoplifting seriously and you’re doing things to prevent it.
Just having security equipment like cameras is advertising your strategies in and of themselves.
Signage that warns of cameras and consequences can also help deter threats, but you don’t want to go overboard because doing so can be off-putting to your legitimate customers.
You’ll have to decide what’s appropriate for your particular business and your customers.
Steps to reduce employee related loss
Retail loss can occur because of your employees, both intentionally and unintentionally.
In an unintentional situation, employees who aren’t well trained might not correctly track inventory or forget to ring up items. Even great sales professionals might be the victim of a case involving a fraudulent return.
On the intentional side of things, employees who try to steal from you might do so with fake returns, for example, where they then take the cash.
Their friends and family could also be involved in losses. For example, maybe an employee doesn’t ring up every item when a friend makes a purchase.
To avoid some of these risks or mitigate them somewhat, you should be careful when hiring. Check professional references whenever possible, and ensure every employee is adequately onboarded and trained when you hire them. You should regularly refresh their training also.
When your employees feel valued and appreciated, financially and otherwise, they’re more likely to be engaged in their job. That engagement can help reduce mistakes and make them more aware of what’s going on around them.
When your employees feel like you’re valuing them, it can also prevent actions on their part that contribute to inventory or financial losses. Typically, disgruntled employees tend to be the ones most likely to engage in theft and similar behaviors.
You want your employees to be part of your overall plan for loss prevention. Get employee buy-in and help each of your employees see what their role is in the prevention of loss.
You want your employees to be invested in the success of your business. Employees invested in organisational success are more likely to take the necessary steps to help prevent losses.
Specific strategies you can use here include events to reward and recognize your employees, career mentorship and development opportunities, and performance-based raises and financial incentives.
Access control
Access control systems are how you can limit who has access to what systems and materials within your business. You can also have centralised visibility to monitor who’s accessing what.
Access control systems include scanners and credential readers, hardware like electronic door locks, and software.
Automation of inventory controls
Look at the different parts of your retail business that you can automate. Automation can help you keep closer tabs on inventory without needing additional labor to implement your strategies.
Finally, how you layout and design your store can make shoplifting harder. For example, you can use wider aisles for better sightlines.
Thieves tend to like tight aisles because it’s harder for your employees to see what they’re doing. Try to eliminate any blind spots with your camera and security systems, and secure your most expensive items.
Your policies, security procedures, technology, and employees all become part of a multi-layered defence against loss in retail.
