A loss prevention plan is the establishment of specific policies and procedures and the implementation of tools that will reduce the incident of internal theft, external theft, and errors that lead to losses. Retail loss accounts for represents 1.47% of retail revenue.
Of that amount,
- 48% is due to employee theft
- 32% to shoplifting
- 15% administrative errors
- 5% vendor fraud
Internal (Employee) Theft
Internal theft is the biggest contributor to loss of most retail establishments. It occurs through many methods including merchandise theft, helping/allowing others to steal, and “conversion fraud” which include void, discount, and refund theft.
External Theft is caused by robberies, shoplifting or other outside sources. Though External theft does not account for as much as internal theft, it is still a significant source of loss.
Errors, such as mistakes in paperwork, inaccurate counting of products or mistakes in money exchange can account for between 5-20% of a retailer’s annual loss. That’s pretty significant.
Vendor fraud is fraud committed by vendors either acting alone or with the help of employees receiving kickbacks. This might include things like price rigging, overbilling, padding the bill, shorting the delivery, and similar schemes.
Smart Strategies for Reducing Retail Loss
Even small losses add up over time and effect bottom line profitability that hurts the entire business, causing lost profits. Those profits could be used for more inventory, expansion, hiring additional employees, or increased employee wages or benefits. Ultimately, everyone loses. Loss prevention strategies take, time, commitment, and a modest investment but pay off in the end.
Here are some important tips in preventing retail loss:
- Do pre-employment background checks
- Implement employee recognition/morale programs
- Develop a loss prevention protocol
- Train employees in theft reduction strategies
- Have a dedicated theft reduction team
- Stop by the business without warning
- Spot check inventory and cash drawers frequently
- Check physical inventory against inventory spreadsheets
- Hire security guards
- Stress Integrity as part of the company culture
- Install access control systems
- Install video surveillance systems and CCTV
- Manage traffic patterns and choke points
- Be aware of dwell times
- Train employees to engage customers
- Train employees to spot suspicious activities
- Train employees on receiving inventory
- Cover receiving areas with cameras
- Use inventory tracking systems, POS systems and other tools to manage and track inventory
About RC Security Consulting
Retail loss is a big problem, and for businesses working within tight margins, it can be devastating. Business security and access control systems can be controlled and monitored remotely, making them a vital part of your loss prevention strategy.
If you have questions about how to leverage business security systems in the reduction of retail loss, give us a call today. We are pleased to assist you.