With more than $50 billion in estimated inventory shrinkage costs hitting the U.S. retail industry in 2019, businesses of every breed are seemingly fighting an endless battle against theft that is only getting worse.
And nowhere is the problem more pronounced and complex to solve than in the grocery industry, which battles not only traditional retail loss threats like internal theft, shoplifting, and fraud, but also concerns about inventory spoilage.
Luckily, as technology has evolved, the ability of grocery stores to use it to their advantage, especially when paired with more traditional loss prevention techniques, has grown too.
To help your grocery business turn the tide against retail loss, here are six of our key prevention strategies you can implement right away.
1. Capture a retail loss baseline.
The 2019 National Retail Security Survey calculated that the average shrink rate among its respondents was 1.38 percent, but does your business know exactly how shrink is affecting your bottom line?
Taking the time to explore the issue with your staff, finance professionals, inventory software, distribution centers, and store managers will give you a good handle on just what your business is up against. This will also provide a baseline for measuring improvements made over time and focusing your prevention strategies on your biggest sources of loss.
2. Tap into your workforce.
A study by ECR found that among grocery stores for which loss prevention performance ranked in the lowest quartile, bringing employee engagement up to at least average levels could result in a 12.5 percent reduction in shrinkage and a 9.5 percent reduction in cash loss.
What does this mean for your business? Although investments in technology can help with loss prevention, don’t forget the role that managers and employees play in fostering a culture of ownership and inclusion. By doing so, your business can empower employees to help protect against potential losses, identify and mitigate risks, and bolster accountability and awareness among co-workers.
3. Increase surveillance technology.
CCTV is nothing new when it comes to combating theft in grocery stores, but the 2019 NRS Survey points to continued growth in CCTV use alongside a quick rise in the utilization of digital video features.
Since 2018, the use of CCTVs and digital video recorders grew 7.9 percent and 9.5 percent, respectively, according to the NRS Survey, with 62 percent of stores using CCTV and 84 percent using video recorders. Once in place, research has found that digital recording devices with features such as facial recognition can reduce shoplifting by 34 percent and identify repeat offenders, which are common in about 60 percent of cases, across stores.
4. Implement POS analytics.
One of the most fundamental problems that retailers face is a lack of timely and accurate data that can track their inventory turnover and financial performance over time and across sites, and monitor for abnormalities that may cause shrinkage.
For many grocery retailers, a key loss prevention strategy can be the implementation of a point of sale analytics system. With one in place, managers will be able to access more real-time and precise data, which can include cash flow, the impact of sales and discounts, and transaction monitoring in case of employee theft or error.
Figures like “refunds without a receipt,” “cashier markdowns,” and “refunds on the same day/same store,” for example, are easy to produce with a POS system and can be used to identify areas for increased attention.
5. Utilize smart safes.
Cash handling is a challenge for any business. From handling cash for basic transactions, to safe storage between deposits or shifts, to monitoring trends, many organizations are learning that they need new solutions.
One popular method is the smart safe, which combines the benefits of technology and software with the tested security and storage features of traditional safes. When combined, these devices can increase visibility into your cash flow, validate transactions and currency for counterfeit down to the cashier, and provide deposit-ready cassettes for pickup.
Furthermore, smart safes introduce user authentication that tracks employee interaction so that it can log abnormal activity and remedy errors.
Bringing it together.
Every business is going to have its own unique combination of reasons for its shrink, but luckily, there are a lot of vetted loss prevention strategies and tools in place to help yours fight back.
To talk through the unique loss prevention needs of your retail business and learn more about smart safe solutions, reach out to the team at Burroughs here.