The retail industry faces profound losses due to theft on an annual basis. These issues with shrinkage and erosion of profit margins can easily lead to significant cuts in revenue. Theft doesn’t just affect profits, however. Problems with inventory control affect the baseline customer as well. As a result of shoplifting, shop owners often must raise prices to cover losses and may have issues with reliable inventory, both of which influence a company’s reputation. Therefore, building an effective loss prevention plan for your retail shop is critical. Below is a look at how to build a loss prevention plan for your retail shop.
Developing a Loss Prevention Plan
There is no such thing as a loss prevention plan that is too comprehensive. The better built the strategy to prevent loss, the more protected the business. From identifying the source of losses, to measuring loss prevention efficacy at higher levels, below is a look at how to build a loss prevention plan for your retail shop.
Identify Sources of Shrink
Identifying where losses occur allows you to build an effective plan to target those issues. Retail shops can deal with shrinkage and loss from several angles, including:
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Internal theft
Employee theft can be just as big of a problem as shoplifting. Not only does this type of theft encompass taking inventory, but it also includes discounting merchandise or giving products away.
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External theft
External theft usually accounts for just over a third of retail shrinkage. Shoplifting, counterfeit payments, and even returning stolen goods for store cash are included.
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Administrative error
Some shrinkage could potentially be related to internal operational mistakes, such as incorrectly documenting inventory during a manual count.
Identify the products or departments that face the biggest issues with shrinkage. For example, if you are continually finding shrinkage in electronics or with a specific electronic product, this offers insight into what areas of the shop need the most attention.
Invest in Quality Security Measures
Once sources of shrink are clearly identified, invest in quality security measures to deter the problem. Security measures like implementing basic surveillance or installing alarm systems are just the beginning. You may need to get more targeted by preventing merchandise from being removed so easily with options like:
- Installing fixtures with security features
- Using secure recoilers to secure high-priced items
- Using peg locks to secure hanging merchandise
- Installing anti-theft display holders for electronics
- Installing secure display holders for mobile phones
Create Awareness in Your Shop
When developing a loss prevention plan, make staff members aware of store shrinkage. Disclose which areas are facing the biggest problems with theft and explain measures being taken to control the problem. Getting everyone on board means you have more eyes on the sales floor and more people working together to prevent loss. Further, if there are internal theft issues, creating awareness may deter ongoing attempts.
Measure Loss Prevention at a High-Level
After building what you believe to be an effective loss-prevention strategy, monitor the effects at a high level. Continue to follow shrinkage numbers and unaccounted inventory with monthly reports. Practice inventory counts in all departments regularly and perform internal audits to ensure those numbers are being accurately reported. If problems continue, this indicates further steps need to be taken, and adjustments need to be made.
Reduce Theft in your Shop with a Loss Prevention Plan
Building a loss prevention plan for your retail shop is a proven way to reduce shrinkage and protect your bottom line. Reach out to the experts at RTF Europe for high-security solutions to build into your loss prevention strategy.
