Now is the time to go on the attack! Fix your loss issues before they cost you this year’s profit margin. To do this, in many cases requires you to change the way you look at losses. First and foremost, if you are not leading with an “LP” mindset, how can you expect others to follow and support your goals? Loss prevention should always enter into decisions even if in a minor way. Decisions on how and where to display merchandise and the standards you set for employees to follow, are just the start.
There are three main sources of loss in a retail environment: External (shoplifters), internal (employees) and paperwork errors.
Let us look at two of these, starting with internal. My experience tells me that about 10% of employees in a given retail store are involved in theft. You may be saying to yourself that “my employees wouldn’t do that to me”. If you find yourself thinking that way, you are actually at a greater risk than most. Because you are in denial. People will steal regardless of how good you are to them, how much you pay them, how many times you have helped them and so on.
Often when I hear someone say that, we end up finding out that they have some of the largest losses. I know this may sound cynical but it is the truth based on my experience and thousands of employee theft investigation I have personally conducted. So what can you do to prevent employee theft?
To start, understand that employees must be held accountable. Employees can steal four different things from you: cash, merchandise, supplies and time. All of these have value including supplies. If you operate at a typical profit margin of 2% after taxes a loss of $100 will cost you $5000 ($100/0.02). So even a twelve pack of toilet paper has value, not to mention the serious morale issue when you don’t have toilet paper! Employees need to understand that the only thing they are allowed to remove from the store is the air in their lungs.
On top of this, what message are you sending employees by your actions? For example, if you have a policy that cash register shortages under $5.00 are not investigated and a cashier held accountable, then you are telling everyone that it is okay to steal up to $4.99.
Look for employees that wholeheartedly share, understand, support (not just to your face) and practice your LP policies. These employees should be held up to be the standard. Others will then follow. Those who don’t, well… you get the picture. We have a great sample document you can use for your LP employee handbook. It sets the standards and lets them know from the very beginning what you expect, tolerate and will not tolerate. If you would like a free copy in Word format that you can customize for your use, please send me an email.
Shoplifters, those horrible people that come into your store and try to steal everything they can. Okay I will say up front, we sell Checkpoint anti-shoplifting systems. These systems are used by most major retailers worldwide and for a reason. They shut down a huge amount of shoplifting. They are commercial grade and meant to stand up to the tough retail environment. With that aside, let me ask you this, Why are you not using one? A Checkpoint System is a proven way to bring your shoplifting losses under control.
Other best practices include the use of CCTV. However, you must have the correct expectations for this. CCTV is a reactive measure. Shoplifters are rarely deterred by cameras as they know you do not have the payroll to watch them all the time or even when they are skulking around in your store. CCTV is good for employee theft prevention and investigation. You can use it in a somewhat proactive way by bringing an employee in, showing them a 60 second clip of them doing something good and then complimenting them on a job well done. They leave with a good feeling but say to themselves and others “wow I guess he/she is watching”. Do that monthly and see what happens. Believe me, word will get around.
Employee training is something we almost always overlook. Or we just say that they are learning as they go. You invest a lot of effort and money into a new hire. Spend a few hours with a structured outline and make sure they understand what their new job is, the standards you have and what you expect them to do each and every day. The document I offered you above for free will help with this.
Pre-employment screening is also overlooked. For example, have you ever confirmed that a person you are looking to hire can actually count money? Do you test for that? Put $100 on the table and see if they can make correct change without the assistance of the cash register. If they cannot, do you really want them handling your cash?
Paperwork errors are just as deadly as any other form of loss. Keeping a correct inventory not only helps with reordering but is a critical component of controlling theft. How can you react to loss, if you do not know what items are stolen? For example, you might not know that a particular item is being stolen because shoplifters have found a demand for it elsewhere. If you suspect that a particular item is being targeted, then conduct what is called a cycle count on it. A cycle count simply means you are counting it on a daily, weekly or biweekly basis. Comparing that information to your sales of that item will allow you to react quickly before it is too late and the losses become severe.
Are you ensuring that your employees are not making mistakes in their work and then not correcting them? You also need to set the standard that you are watching and reviewing. For example, if an employee is checking-in a shipment and they are to piece count every item, then follow through by picking up the manifest that they just did and spot check their counts on a few items. When they get it right, complement them. If they made mistakes, show them their errors and let them know how the job is to be done and the standard. By the way there are vendors that will try to short your shipment hoping that you don’t check. Vendors and shippers also have employee theft issues and you do not want to be left holding the bag for their issues. I have caught major shipping company employees cutting open the bottom of boxes removing merchandise and then taping the box back up. All of this is done on the truck before they arrive at your business.
I realize that much of this is common sense. However, in many cases we are so busy trying to make money that we forget to keep the money we have on the bottom line. Remember, we are here for you. If you have any questions or issues, we are simply a phone call or email away.
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