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Tips for Reducing Retail Shrink
Every retailer has felt the pain of inventory shrinkage. In fact, many would say it's their biggest problem. While the effects of the recession are still being felt everywhere and the busy Christmas shopping season is looming in front of us, shrinkage has got to be on the forefront of retailers' minds. Retail shrink is defined as a discrepancy in the amount of goods a store should have on hand and its actual inventory, usually not in favor of the store owner.
The third annual Global Retail Theft Barometer, conducted by the Centre for Retail Research, indicates that shrink rose 5.9 percent in the past year to $114.8 billion worldwide. The United States remains the country with the highest merchandise theft with $42.2 billion, with the biggest percentage of that due to employee theft. The research also showed that spending on loss prevention went down by about $900 million in the last year, which seems to be a result of retailers' tightening their budgets.
The best way to reduce shrink is to first determine the root cause of the main area of loss. Here are some tips for discovering and reducing shrink:
- When receiving in products from vendors, verify the quantity received against the quantity ordered. Have a work station or mobile computer near the receiving dock on which you can pull up the original purchase order.
- Review the layout of your store and position employees to reduce "blind spots" where products and/or customers are not visible.
- Keep the products with the highest turnover and highest cost closest to where employees are stationed. The more watchful eyes around them, the better.
- Do regular cycle counts of the products with highest turnover and highest cost to ensure that inventory counts are correct. This will help in uncovering problem areas and make sure that you have stock of the most popular items.
- If you don't already have an automated point of sale program with an inventory management function, consider getting one. It can give you immediate access to inventory numbers and generate reports showing sales, so you can better predict future inventory needs and spot potential problems. Employees who know that the inventory and cash is being tracked will be less likely to try to steal.
- Consider using EAS (electronic article surveillance) tags on your high dollar products. The EAS tags and portals are a bit of an investment, but you can save by getting barcode scanners that can deactivate the EAS tags when they scan the UPC instead of buying a separate EAS deactivator.
