Sometimes retail business owners offer their customers free samples of merchandise as part of their promotional efforts. Unfortunately, some customers like to take “free samples” that the shop owner does not know about. This is especially true in a tight economy.
It could be some time before the owner realizes the theft. He may not see what is happening until the business begins experiencing significant cash-flow problems.
Some inventory losses are because of employee theft, breakage and other causes, but most loss is from shoplifting.
So what can you do to reduce these losses?
Start by keeping excellent records of merchandise purchased and merchandise sold. It can be done manually, but there are computer systems that can make record keeping easier, including systems that automatically scan items at check-out.
Excellent record keeping is irrelevant if you don’t compare records to actual inventory. Take regular inventory and compare it to your records. Pay close attention to the amount of shrinkage and how it affects cost of goods sold.
There are statistics available for different industries showing averages for cost of goods sold, shrinkage and how often owners normally take physical inventory counts.
Statistics on cost of goods sold are available through RMA Annual Statement Studies. You can find more information on operations statistics and best practices through trade associations related to your business.
Take action to discourage shoplifters, as they normally only steal when there is a clear opportunity. Store layout can make it difficult for shoplifters to conceal activities. For example, keep expensive items near the checkout counter, under glass or in a locked case.
Other techniques include having the checkout near the front and aligning aisles and installing mirrors so you can see customers.
Security cameras (even fake ones) discourage shoplifting. If your store is large enough to have a PA system, frequent announcements (even fake ones) concerning having a “security check” in “section B” of the store make shoplifters nervous and less likely to act.
Staff should move around the store, greeting and recognizing customers. Good customers appreciate this, but shoplifters hate being noticed.
And many times shoplifters work in pairs, with one creating a distraction while the other steals merchandise. And children may be part of the ruse.
Use good judgment
Whenever preparing to confront a suspected shoplifter, be sure you know your legal rights and have a clear policy for handling shoplifters.
Also consider whether you can handle the situation. Physical confrontations are possible and may not be worth the risk.
Properly train employees to monitor customers and know what actions to take if shoplifting is suspected. Have a consistent store policy to prosecute all shoplifters. Post it in clear view to discourage shoplifters.
Hire a security guard to help monitor shoppers. Beware that even security guards may steal merchandise.
Don’t wait until you see your cash flow diminishing to take action against shoplifters.
Connie Edwards is a business consultant with the University of Georgia’s Small Business Development Center. Contact her at 651-3200.