Building a Loss Prevention Plan for Retail
Preventable losses are happening in retail businesses every day, whether they are happening through the abuse of company policies, theft, fraud, vandalism, accidental waste or employee misconduct. When these types of human actions, intentional or not, cause business loss, it’s what’s known in the industry as revenue “shrink.”
Actions that could have been prevented or stopped end up shrinking business profits—but it doesn’t have to be this way. The truth is, by recognizing the problem and taking steps to counteract it, companies can begin to effectively prepare for and prevent unnecessary losses. What companies in the retail industry need to do is implement clear and actionable retail loss prevention plans. With that in mind, here are some specific concepts to implement that can help your business protect its profits:
Establish Support from Management
In order to effectively minimize business losses, a commitment to preventing shrinkage has to start at the top. Get commitment from senior management to make your retail loss prevention plan a priority. This will put power into your action plans and ensure there are resources to allocate to necessary investments.
Take a look at the cold, hard facts on your company’s current revenue shrink. How much are you losing each week? Are the numbers going up or down? What factors seem to be influencing those numbers? As much as is possible, make decisions based on data. This will help you increase the efficiency of your efforts and lower shrinkage more effectively.
Think before You Hire
The right employees will go a long way toward reducing unnecessary business losses. When it comes to new hires, do your due diligence to carefully interview applicants, check references, look into any previous convictions, verify past employment claims, etc. Run background checks. Find out who you’re hiring. Simply researching your candidates can help you weed out some of the ones who might cause problems stealing money or being negligent on the job.
Implement Supervision at Your Retail Location
In the retail environment, accountability is no small matter. Your employees need to know you’re watching the cash drawers and monitoring activity at the store in order to be most motivated to protect your assets. Likewise, customers will be far less likely to steal products when they think they may be caught.
Install a digital video surveillance system, or update your existing video security system to make sure that you’re monitoring your premises efficiency and effectively. Make the most of all available resources in order to ensure that you are working as effectively as possible to protect your profits.
Use a Cash Safe
Nobody has to tell you that companies with cash on hand are at a higher risk for robberies and/or cash shrinkage. Don’t make it easy for employees or customers to pilfer cash at your store—keep money locked away and protected in a cash management safe. By locking away your assets, you’ll be able to lessen one of the biggest threats to your business profits.
Create an Emergency Response Plan
Not only does your retail business need a clear, comprehensive emergency response plan for unexpected violence or other incidents, but also it needs a way to rehearse and clarify that plan to employees. Create a plan of action and communicate it down the line from the owner to part-time sales staff. When everyone is trained and prepared for emergencies, your business has a much better chance of avoiding losses in crisis situations.
Motivate Your Staff to Reduce Shrinkage
The more your entire company is on board with preventing revenue loss, the more effective your program can be. Find ways to motivate your staff to want to reduce shrinkage as much as you do. Clearly, communicate your plan and goals so that everyone is on the same page. Empower managers and store workers to have a say in improving shrinkage efforts. You may even want to offer an incentive (e.g., a percentage of savings) to associates for reaching certain targets.
In the retail environment, inventory loss can often seem like a necessary evil, something that has to happen in the industry—but your business can change that. Using the steps outlined above, take a proactive approach to reducing shrinkage, and see how it can affect your bottom line.
Wes Wernette currently oversees marketing at FireKing Security Group in New Albany, IN. The company specializes in products and services to secure your business assets, including safes, cash management products, and file cabinets.