Retail shrink (otherwise known as shrinkage) is the percentage of your inventory that goes missing, gets damaged, or goes ‘off’. This is a big problem for retailers, as they are spending money on stock and not seeing a return. This loss can be due to shoplifting, employee theft, stock passing expiry date or perishable stock going off, supplier fault or fraud, administrative mistakes, and accidental damage.
To calculate shrinkage, one needs to compare the documented amount of stock that should be there, with the stock that is actually there. Take that total loss and divide it by the total sales. This will amount to the retail shrink percentage.
Retail Shrink Action Plan
In order to effectively prevent shrinkage, one needs to create and implement a retail shrink action plan. There are multiple aspects that can help form a plan that will work efficiently and effectively.
- Manage the problem from the top-down, and make sure everyone in the organisation is involved in preventing shrinkage.
- Ensure you hire trustworthy employees that take pride in their work, and will not abuse their privileges or power.
- Provide your employees with shrinkage training to ensure they know how to spot and prevent shoplifters.
- Give your employees responsibility and empower them by providing them with opportunities to improve themselves. This will boost morale and loyalty.
- Encourage good customer service. This will let customers know that the staff is there to help them with anything they need, and will deter shoplifters, because they will feel as if they are being watched.
- Organise your store meticulously to ensure you know and see exactly where everything is, at all times.
- Invest in processes and equipment that will allow for a perpetual inventory management system, allowing quick and regular stock taking.
- Make sure that you supplement your retail shrink action plan with good anti-shoplifting technology.
Retail Loss Prevention Systems
A retail shrink action plan will definitely help, but a retail loss prevention system will ensure additional protection. EAS (Electronic Article Surveillance) is the key to a successful retail shrink prevention plan. By tagging products, and installing antennas at the store entrances, you deter potential shoplifters and know with certainty that you will be notified if someone tries to steal stock. Anti-shoplifting technology that can provide this functionality includes AM, RF, EM, and RFID. Depending on your specific needs and requirements, one of these anti-shoplifting technologies will be the answer to reducing your shrink percentage.
At Milestone, we stock a wide variety of anti-shoplifting solutions that will be able to reduce the shrinkage experienced in your retail store. To find out more about how these systems and technologies can benefit you and your retail business, contact us at Milestone.