The retail world has changed significantly with technological advancements. The technology has enhanced the retail shopping experience by enabling store pick-up, delivery service, self-service, and retail e-commerce business. Though these advancements make retail shopping experiences enjoyable and convenient and increase the pace, the risk of retail loss has also increased. It affects the company and its relationships with customers and different stakeholders.
Some common types of Retail Loss are shoplifting, returns fraud, Administrative errors, organized retail crime, vendor fraud, employee theft, and unattributed loss. All these preventable losses are known as Shrinkage. The measure to take in such situations is Retail Loss Prevention. It is a set of actions and best practices designed to identify the causes and the ways to mitigate them.
A Retail Loss Prevention strategy helps protect the bottom line, maintain profit margins, protect consumer relationships, and minimize risk.
Retail loss prevention measures:
This article will guide you to different measures to help mitigate retail risk and preserve profits.
1. Use Security Devices
Naked eyes are not enough to catch shoplifters, and you need to have some intelligent security systems for that. Various Security device installations at the retail store can prevent shoplifting.
Security Cameras and mirrors make the staff watch the customers and their activities which are generally not visible. Security cameras also provide evidence in case of theft. Mirrors and cameras placed at all corners turn out to be helpful.
Security devices like metal detectors and garment tags help you know when a customer is moving out with unpaid clothes. The garments tag is pinned to the clothes and only gets removed through special devices.
2. Set Clear Policies
Employee theft is a widespread observable retail loss. You should set out clear and precise employee policies outlining the terms and conditions of employee service. Also, include the regulations to take disciplinary actions in case of theft. These policies should alert your employees and state the acceptable use of company property.
Also, set up an employee code of conduct that communicates the business’s ethical values and what you expect from the employee. It makes the employee step back from committing theft or fraud.
3. Reorganize the Store Front
Poorly organized stores are prone to more shoplifting than organized ones. Unorganized stores make it easy for thieves to take off the merchandise without being caught. You will not be able to find out the place of action. Organized stores make it easy to detect missing products sooner or later and help in retail loss prevention.
Also, the store should create a layout that employs a checkout point and exit area to leave. The checkout point ensures the detection of all the products purchased matching the bills. To avoid tall displays and blind spots, strategically design product positioning, display area, and store floorplans to catch theft.
4. Return Policy
Your store’s return policy is essential to avoid return fraud. Return frauds can include-
- Returns of stolen products.
- Returning exchanged products.
- Products purchased with counterfeit money.
- Used products.
Set up the following return policies to avoid such fraud.
- Ask customers to present a receipt provided at the time of purchasing the products to initiate the return.
- In case of receipt loss, offer store credits or exchanges instead of the return.
- Enforce strict 15 days or 30 days return policy.
- Match the returned item with the bill receipt.
- Ask for customer personal contact information to initiate returns.
- Do not accept the return of non-durable products.
- Train employees to catch return fraud.
- Require valid ID to track the returns.
- Ask for the reason for the refund.
5. Strict Accounting Principles
All the shrinkages are not just about the in-store losses. Balance sheet losses are also equally important to keep a check. The business should adhere to strict accounting principles to minimize accounting losses.
Many businesses follow the conventional cost accounting principle and only track inventory based on the cost paid for it when received. However, it’s not the best approach for a retail business.
This method requires a more attentive approach. Instituting retail accounting helps retail loss prevention by catching more administrative errors than cost accounting. Retail accounting values the inventory based on its retail price. It helps track the retail prices over time, including the markups, markdowns, and sale prices on each product.
The retail world is linked to Shrinkage. Shrinkages cannot be ignored, and businesses must apply effective retail loss prevention measures. These prevention measures will help your business minimize the risk to a great extent and prevents further loss.