Tackling loss to improve the retail bottom line

retail bottom line

With the annual company reporting season well and truly under way all eyes are currently on retailer’s bottom lines.

And this year there’s a lot to take into account considering the tough conditions Covid-19 has delivered and the ongoing shift in retail technology and consumer expectation.

It’s making for some major headlines in terms of winners and losers. But while many of these factors may be beyond a retailer’s immediate control, one area where they can improve that all-important bottom line is through loss prevention.

So, let’s take a quick tour through the four areas of retail loss, and how you can tackle them to improve the retail bottom line.

The four areas of loss

Estimated to wipe $3.37 billion from the retail sector’s bottom line annually, loss (or shrink) comes from four main areas:

  • Shoplifting
  • Employee theft
  • Supplier fraud
  • Administrative error and miscellaneous loss

The good news is all of these areas can be monitored and strategically targeted to improve that all-important bottom line.

So, let’s dive right in, looking at where your loss might be occurring…


retail bottom line - shoplifting

Accounting for 57 per cent of all retail loss in Australia, shoplifting is the first suspect to consider when tackling retail loss.

The nation’s most recent retail crime survey indicates shoplifting has surged in recent years as part of an ongoing trend.

Targeting shoplifting

Targeting shoplifting involves a multi-pronged approach.

It includes:

  • Product level protection like security tags and electronic article surveillance
  • Storewide protection like CCTV, security guards, and burglar alarms
  • Store design, with a focus on good lighting, and store visibility from the Point of Sale
  • Staff training to identify the signs of shoplifting and a customer service ethos that encourages staff interaction with consumers

Employee theft

Employee theft continues to rank as the second most common reason for loss in-store, with 22 per cent of loss attributed to dishonest employees.

Targeting employee theft

Employee theft is managed through clear policies and procedures, a positive workplace culture and stringent hiring practices.

This involves:

  • Screening all potential employees and seeking out references
  • Education on the repercussions and impacts of employee theft
  • mPOS software that requires each staff member to individually log into the Point of Sale
  • Management supervision
  • A workplace culture where employees feel valued for what they do

Supplier fraud

Although far less common than either shoplifting or employee theft, supplier fraud accounts for six per cent of loss in Australian retail, wiping millions from the industry’s bottom line.

Targeting supplier fraud

Protecting your store against supplier fraud comes down to implementing the right systems and procedures to immediately identify any loss.

This extends to:

  • Inventory reconciliation
  • RFID tagging at the point of manufacture to track stock
  • Clear systems and procedures on stock delivery

Administrative error and miscellaneous loss

retail bottom line - administrative errors

Like supplier fraud, administrative error and miscellaneous loss is far less common than theft-related shrink.

The Australia and New Zealand Retail Crime Survey indicates this non-crime related loss equates to 15 per cent of the industry’s shrink, highlighting just how costly simple mistakes can be.

Targeting admin error and miscellaneous loss

The trouble with administrative error and miscellaneous loss is that it can be harder to identify than other causes of shrink. That said, combatting it often corresponds to good store management.

This includes:

  • Regular stock taking using tools like RFID
  • The cross-checking and reconciliation of orders
  • Clear policies and procedures for handling stock, storing it, and putting it on display
  • Security tools like lockable cabinets and drawers
  • Clear assignment of roles and responsibilities in store

There’s never been a better time

With 2020 serving up some tough operating conditions for retailers across the nation, there’s never been a better time to tighten up a store’s loss prevention strategies and the benefits of doing so could be significant.

Last year, retail loss cost the sector a jaw dropping $3.37 billion and right about now, that’s a profit no retailer can afford to lose.

You can learn more about the tools available to minimise shoplifting, employee theft and shrink here.