"Uncontrolled inventory shrinkage erodes profit, kills annual budgets and forces sales staff reductions to the point where store appearance and productivity falls off, effectively killing the viability of the store," says Los Angeles-based Chris McGoey, a loss prevention expert and lecturer and president of McGoey Security Consulting. "To stop this downward spiral, the store needs a loss prevention plan that focuses on the major causes of inventory shrinkage."
According to a 2012 National Retail Federation survey, retail shrinkage caused by employee theft, shoplifting, paperwork errors or supplier fraud costs American business owners more than $34 billion per year. You can cut down on retail loss in your store by implementing important loss prevention practices.
Whether an employee is directly stealing cash or charging a customer one price, ringing up a receipt for less and pocketing the difference, employee theft is the biggest single cause of retail loss for U.S. business owners at about $15 billion annually, according to the NRF survey. Fortunately, there are some effective ways to reduce it:
Businesses also lose a significant amount of money to shoplifters — just shy of $10 billion a year. Here are some simple and straightforward guidelines to help curb this common crime:
Loss can also be caused by vendor error/fraud, which occurs most often when vendors do their own stocking. This can be prevented by doing truck and delivery audits and keeping a close eye on receiving. These measures can keep you from mistaking missing inventory for items that were never in your store to begin with.
Administrative errors account for about 12 percent of shrinkage in many businesses. These errors are often the result of simple pricing mistakes due to markups or markdowns. Audits can help avoid loss in this area, as can stepping up employee training. Shrinkage remains a serious problem for American retailers, but with a combination of careful hiring and employee supervision, a vigilant and clear policy toward shoplifting, and consistent audits and training, you can cut down on its impact on your retail business.