Your retail loss prevention strategy has many moving parts. It really has to, considering the number of employees and customers traversing your brick-and-mortar store location on a daily basis. And while most inventory losses are preventable, all of them can negatively impact your business’s morale and profitability. That’s why it’s essential to stay on top of your loss prevention efforts.
National Retail Federation’s (NRF’s) National Retail Security Survey reveals that 8.1% of retailers have reported increases in inventory shrink, which cost the overall U.S. retail economy $45.2 billion in 2015. Here’s a breakdown of the reported sources of inventory shrink:
- Shoplifting – 39.3%
- Employee theft – 35.8%
- Administrative/paperwork error – 16.8%
- Unknown loss – 7.2%
- Vendor fraud/error – 4.8%
With these figures in mind, let’s examine the variety of ways you can protect your merchandise, help minimize inventory losses, and maintain peace of mind for you and your employees.
- Hire LP Professionals
According to NRF’s study, loss prevention professionals make the bulk of shoplifting stops, and, in fact, only 31% of survey respondents say non-LP personnel (e.g. managers, specially trained cashiers) are allowed to make shoplifting apprehensions. LP professionals are dedicated to store security—they’re focused on customers and merchandise staying in the right place at the right time. They’re on site, either on the retail floor or watching from nearby security monitors, trained to spot people tucking stolen items into their pockets, bags, strollers, or even umbrellas.
- Conduct Employee Integrity Screening
It’s common practice for employers across industries and job categories to screen and/or assess employees prior to hiring. For retail positions, employers can’t be “too careful,” considering their employees’ proximity to merchandise, inventory, and cash. The NRF survey report makes reference to various employee screening options you can use, including criminal conviction checks, multiple interviews, verification of past employment, personal reference checks, and drug testing. Some employers also conduct pre-employment honesty testing and handwriting analysis, while others review worker’s compensation claims associated with prospective employees.
- Organize—and Deter
Envision the inside of any retail store and you’ll find plenty of racks, shelves, stacks—and plenty of blind spots. Unfortunately, thieves and dishonest store personnel are very good at finding (and exploiting) points of vulnerability. Your first line of defense may be keeping your retail floor and merchandise organized and tidy, as disarray can help “muddy the waters” for would-be shoplifters. But deterrents like these can stop thieves in their tracks:
- Visible security guard
- Well-placed anti-theft signs (e.g. “Shoplifters will be prosecuted!”)
- Anti-theft alarms
- Cables, locks and chains
Additionally, you can lock small or expensive items in cases or cabinets and use an armored vehicle to transport deposits.
- Implement Inventory Management Technology
In this day and age, technology can help manage almost every piece of your loss prevention strategy. A few examples:
- Point-of-sale software can help reduce losses from attempted false returns and exchanges, or help to authenticate customers’ identities
- Inventory management software systems allow retailers to collect and report on a wide range of data accessible though user dashboards and reports
- Barcode and mobile solutions make it easy to conduct physical inventory counts using your connected devices
- RFID (radio frequency identification) tags enable merchants to locate items and ensure that products are where they’re expected to be
- Promote Loss Prevention Awareness
Put your employees in-the-know and give them the insights they need to help keep your store safe and shoplifting-free. Whether you meet with employees daily or weekly, take time to connect on inventory safety issues. Ensure they know what to look out for, such as switched price tags or customers that spend more time looking around to see “who’s watching” than looking at merchandise. You can also leverage newsletters, webinars, and special events to communicate important information and tips. Providing an anonymous hotline, publishing a code of conduct, or offering honesty incentives are other ways to engage employees in day-to-day loss prevention.
Here are some other good practices, courtesy of Shopify:
- Greet each customer when they enter the store so they know you’re aware of them
- Ask customers to “check” any bags they bring into the store
- Have a code your staff can use to alert each other of suspicious activities
- Check Your Insurance Coverage
Ask your insurance agent to review your existing policy with you to make sure it’s up to date and reflects your most current business needs and assets. In the event of an inventory loss, you’ll be glad you did. To find an agent near you, visit our agent locator.
Acadia Insurance is pleased to share this material with its customers. Please note, however, that nothing in this document should be construed as legal advice or the provision of professional consulting services. This material is for general informational purposes only, and while reasonable care has been utilized in compiling this information, no warranty or representation is made as to accuracy or completeness.