Like a steadily dripping faucet that slowly raises your utility bill, the average business lost 1.33 percent of its overall sales due to retail theft. While this figure may not seem like much, for a retailer bringing in the average revenue of $390,000 a year, that’s more than $5,000 that it may never get back.
Although external threats to your bottom line and internal risks may never be fully eliminated, especially with the rise of smart devices and internet sales, there are some proven ways to help prevent retail loss. From sophisticated new technology-enabled tools to the tried-and-true methods of employee education and sound procedures, it is always a good time to invest in a multifaceted approach to stop that steady drain on your business’ bottom line.
To help your business not only stop a leak to your profits but also prevent one before it happens, here are a few practices to put into place.
Loss prevention isn’t a skill taught in school, so your employees need to be trained on how to identify the different forms of theft and how they affects the health of your business operations. There are many flavors of retail theft, ranging from return fraud to merchandise theft, counterfeit cash, embezzlement, and credit card fraud.
Introducing a multifaceted training and awareness campaign can go a long way toward giving your employees the tools that they need to lower the risk to your organization. These awareness campaigns can include a code of conduct, training videos and software, periodic programs or communications, and customized walkthroughs on how to utilize cash and inventory management tools. If all else fails, according to the National Retail Federation, 81 percent of businesses also use anonymous telephone hotlines to get tips on potential areas of concern.
Because vigilant managers and employees can’t personally protect against every scenario, businesses can also use loss prevention technology as an extra layer of risk mitigation. While CCTV cameras and alarms can help, their scope is limited. Instead, businesses have begun to turn toward technology such as smart safes and point-of-sale data mining.
In addition to helping protect your cash, smart safes have built-in counterfeit detection, real-time cash inventory counts, and integrated logging features to both protect your cash in-store from theft, but also help eliminate errors and provide accurate awareness of cash holdings by site or even teller. Point-of-sale data mining uses similar logging techniques to monitor transactions and cash drawer activity, generate alerts for unusual activity, and log events such as unauthorized discounts, unusual returns, and no-sale cash movements.
Finally, in addition to deploying new technology and utilizing ongoing training and awareness campaigns, one of the best things your organization can do is to establish sound processes and procedures around employee accountability.
Having a structured and consistent way to hire and screen employees can help lower the chances of losses due to retail theft. According to the same 2018 National Retail Federation study, many of the traditional loss prevention methods continue to be among the best ways to help lower the risk to your business. For example, more than 84 percent of retailers make sure to conduct criminal background checks, 81 percent facilitate multiple applicant interviews, and 60 percent take the time to verify past employment history.
Once employees have access to your retail systems, more tailored processes and strategies can help. Lessons presented by the Harvard Business Review of techniques used by global firms like Target, CVS, and Best Buy, for example, include the concept of empowering store workers as “the final piece of the puzzle” of controlling loss prevention. To enable this, store managers and workers should be asked to participate in the development of loss prevention plans, and business owners should give them the training, tools, and technology to implement their plans.
Since the first store set up shop, inventory loss and retail theft have been an unavoidable part of running a business. But while technology has introduced new risks for retailers to mitigate and understand, taking the time to invest in and reinforce sound training programs, establish a culture of loss prevention, and implement new smart tools can help your business reduce the drain on your profitability.