Various independent studies have concluded that every year, the retail industry stands to lose around $160 billion. This includes lost sales opportunities that result from employee theft, shop lifting, administrative error, wrong pricing, vendor fraud, and administrative fraud. Ironically, the solution to these problems is uncomplicated and indeed inexpensive. Door intercom video and key card access systems are just some of these measures. A study conducted by the University of Florida held that internal theft accounted for more than 48.5 per cent of the company’s losses. Before we look into the different measures to control shrinkage, here is a brief explanation of what shrinkage is.
Industry experts define shrinkage as the loss of revenue caused by the loss of a product due to theft, error, fraud, and even incorrect stock taking processes. Curbing shrinkage in the industry can indeed cause profits to double for retailers.
But how are these controlled? Various business security companies have come up with technologically advanced products to help retailers control shrinkage. There also has to be a concrete policy that includes a combination of employee awareness and training, as well as technology to help them control theft. These include:
Conducting a complete analysis of the current shrinkage: Companies ought to understand the percentage of shrinkage that is occurring and how it occurs. This helps to categorize and estimate spending in specific areas and justify resources spent to help reduce shrinkage.
Use appropriate technology: There are several products including business security camera systems and door intercom video that allow retailers to monitor their business. These are easy to use and can be remotely monitored. The key card access system for instance helps to prevent unauthorized access and helps store owners monitor the entry and exit times of employees. The door intercom video system helps to determine and control visitors entering the premises. Besides being used to monitor visitors and employees, the business security camera system helps to assess staffing at appropriate levels, check item sales and point-of-sale terminal reports.
Besides these small yet concrete steps, other efforts like ordering in small and desired quantities, handling products carefully, ensuring proper sanitation and ensuring hygienic conditions, managing physical inventory etc. can also help to control shrinkage. There are some retailers who follow the policy of “3,” where only the goods that can be sold within three days are to be ordered. When new employees are inducted, there ought to be a comprehensive policy that inculcates trust and faith between employees.
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