Some people in retail look forward to it and some dread it. What am I talking about? Inventory! From the planning stages and meetings with the inventory counting team to the actual inventory day it can all be a lot to accomplish even for the best of planners. But what happens when you get through the actual counting phase? What comes next? You wait for the results. You may get preliminary results immediately but for larger stores booked inventory may take several weeks and they have teams to analyze the results. As a small retailer you may have to analyze the reports yourself but do you really understand what you are looking for? Are your results accurate? Stores have to keep track of what they have on hand and owners need to know where shortage has taken place and how it has happened.
A detailed review of the inventory results is important. They can identify areas that may be indicators of poor vendor service. If your store sells groceries, snacks, soft drinks or adult beverages you are most likely served by direct store delivery vendors. If a shortage is somewhat high in these departments you might not be receiving all of the credits you are supposed to receive. This is not necessarily an indicator of theft but it could be. It may be simply poor scanning and crediting for merchandise a vendor is removing from the store. Those credits could be due to product getting ready to expire or that has expired. It may be it was a promotional product that isn’t selling in the quantities the vendor was hoping for. Whatever the reason, the representative could have miscued an entry, for example, scanning a partial pallet of sodas and keying in a quantity of 10 versus 100. If the vendor is in a hurry and no one caught the error at the time it could be costing your store a lot of money.
While we are talking about administrative errors causing shortage it is important that store owners take a look at all of their billings. In a big box retail store, we had monthly P/L (profit/loss) statements that showed the dollar amounts of merchandise shipped to us for each department. One year when inventory results revealed a high shortage result in our shoe department I went back through all of the P/L statements and found an unusual billing amount. I tried to correlate it to a seasonal reset or specific event but was unable to pin it to anything in particular. I sent my concern to our inventory analysts who reviewed the information and found we had been overcharged $10,000 in the shoe department that particular month. Review P/L statements or invoices for potential errors if inventory results seem out of line.
Look at the departments that are showing the shortage. Do they look like areas that would be prone to theft or could there be other administrative issues involved? For example, if you own an office supply store and you have a high shrinkage in printer ink cartridges there is a strong probability this is a theft concern. On the other hand, shrink in foam project boards could be due to process issues. Are individual foam boards shipped in multi-pack shrink wrap? It could be the items are not being separated and a bulk set is improperly sold as a single unit at the register. Have individual units been damaged and unsellable but not properly marked out of stock before tossing them? Foam boards are probably not being stolen but improper handling is costing money to your store just the same.
Certainly, theft has to be a consideration in the review of inventory results. But one must be careful not to attribute ALL shortage to theft. Doing so may keep you from impacting up to 26.7% of your losses in the next inventory cycle. According to the 2017 National Retail Security Survey, 21.3% of a shortage is due to administrative and paperwork errors and 5.4% is the result of vendor fraud or errors. That said it is important to dig into potential theft concerns that are impacting your store. Are you the target of shoplifters? Do you have an employee theft problem you did not realize existed? Getting a handle on theft must be part of your follow-up in creating a shortage action plan to improve shrinkage. Consultation with Loss Prevention Systems Inc. is a good starting point for finding a solution to all of your shortage concerns, theft included.
If you take inventory and find you are missing SKU’s because results are askew, take time to dig into the findings. Knowing where shortage happened this year and taking steps to correct it will give improved results next year.
The IT world has a phrase “garbage in, garbage out”. The same concept applies to hiring new employees. If you do not put effort into selecting a new employee, then chances are you will be disappointed down the road.
March is known for coming in like a lion and going out like a lamb. April showers bring May flowers but what in the world does May bring? May ushers in the summer sales season! Spring is wrapping up and now is the time to be getting your store ready for all of the shoppers looking for the items that will make the long, warm days of June, July and August a memorable time. The big stores are rolling out grills, picnic wares and yard games.
Holiday sales events and promotions are intended to boost retail sales. The obvious big event is the Christmas holiday season which seems to begin in October for many retailers. The event carries into January when merchandise goes clearance as retailers prepare for the next holiday event and the beginning of the Spring sales lines.
What do you do when a crisis occurs? Many people would say they take steps to address the crisis. Initially, that may sound like a good response unless you never planned on how you would react if that crisis were to take place. Think about it for a moment. If your business was on fire would you want firemen pulling up in their cars without the right gear or a plan of action of how they will take care of the fire? Sure it’s good to have the firemen there but if they don’t have the resources they need or a strategy on how to put out a house fire then the response is pointless. Police officers train on how to respond to a bank robbery in progress but the reality is many officers will never face that situation. According to a Cleveland Clinic Survey, 54% of Americans say they know CPR but the vast majority of us will never be called upon to use that training. So why do we do it? Why do we train for circumstances that are unlikely to ever confront us? We do it so we will be prepared for that one-in-a-million chance that we might have to apply that knowledge. President John F. Kennedy once said, “The time to repair the roof is when the sun is shining.” Attempting to play it by ear should an emergency happen is not a plan and may even make a problem worse.
The scary shoplifting cases we hear and see on TV, or on newspapers in the United States, are becoming too commonplace to rendered us shocked. 
Recently, I conducted an employee theft investigation for a client. I want to share some of the findings from that investigation in the hopes that you can use it to review your own potential for losses. 
Sometime this year you will most likely be conducting an inventory. Some stores even conduct multiple inventories when they have high stock shortage results. While it does not necessarily translate to poor results, a lack of adequate preparation can have an impact on the final shortage numbers.
In a recent article published in LPM Insider, “Security Footage Sinks Employee Lawsuit Targeting Employee Bag Checks” by Garrett Seivold, Feb 7, 2018, they discussed a lawsuit brought against Nike by an employee who complained that he was being required to have package checks done when he was off the clock. His argument was that he was not being compensated for the time he is delayed. For the time being Nike has not been found to be excessive in its demands. They were able to demonstrate that employees were only being stopped for an average of 18 seconds for an inspection. This is hardly excessive by any measure. However, courts have a tendency to be inconsistent or a higher court may overturn a lower court decision. While one court may uphold the decision in favor of Nike there is no guarantee this will be true should a similar lawsuit be brought against other retailers. 