Top Strategies to reduce retail shrinkage

reduce retail shrinkage

The bricks and mortar retail environment may have changed dramatically in the past few years , but according to the Global Retail Theft Barometer, the cold hard numbers of retail shrink have altered little.

Comprising shoplifting, employee theft, supply chain loss and fraud, it’s a global problem equating to US$1.234 billion annually or 1.23 per cent of retail sales.

In Australia it sets the average householder back AU$424 each year, costing $2.7 billion nationwide, according to Inside Retail.

In this series we explore the prime strategies used to combat retail shrink, and profile how they can arm retail stores in the ongoing war against theft.


Part 4 – Personnel and environmental strategies

While technology plays a fundamental and increasingly pivotal role in the deterrence of theft and catching shoplifters in the act, the best loss prevention strategies include a multi-pronged approach. Store layout, staff training, and specialised security personnel have long been part of this war against shrink, and, according to experts these human-based strategies for watching over loss are unlikely to change anytime soon.


Store layout

Throughout the lengthy history of the bricks and mortar shopfront, retailers have used store layout as a sales tool to lure shoppers in and encourage them to buy. But according to a recent article in Loss Prevention Media it can be used just as effectively to deter retail theft.

“Just as with sales and customer satisfaction, retail store design can either help or hinder LP. It can enhance loss prevention technology and facilitate safety through aisles planned to coincide with camera angles, and shelves designed to maximise employee visibility. Alternatively, it can create hiding spots for shoplifters with poorly monitored exits and dark, unprotected aisles and corners.”

Optimum store layout sees retailers think like a criminal, and then work to minimise areas where theft is likely to occur. This includes creating a clear line of sight for employees to monitor high value areas, and positioning the register near the front of the store.

“By increasing the “eyes on the stuff” that employees, shoppers, and casual users provide, a shoplifter’s sense of risk is also increased dramatically,” Loss Prevention Media continues.


Staff training

But good layout doesn’t work in isolation, it needs to be coupled with adequate staff training.

Paul Bessant of Retail Knowledge told Forbes this includes having personnel meet and greet shoppers, and training them for signs of shoplifting.

“The big problem for retailers is that good salesmanship and modern store layout is the equivalent of having a house sale. It is like opening your garage and front door to total strangers and then sitting in your back yard and facing your neighbour’s fence,” he notes.

His suggestions include increasing staff presence around high value items, and having one staff member who is responsible for “meeting and greeting” all customers. Meanwhile stores should also conduct regular loss prevention training, highlighting what to look for with clear policies and procedures about how theft incidents should be handled.

But it’s not just random thieves making off with inventory. According to the Global Retail theft Barometer in Australia 25 per cent of the time that theft is committed by paid and trusted employees.

The key to handling this, Bessant continues, is good employee screening procedures that include interviews and reference checks prior to job commencement in addition to random bag checks, controlling access to cash intake, and a strong management team in everyday practice.


 Loss prevention officers/security guards

Call them loss prevention officers, security guards or business asset managers, there remains a place in retail for the presence of a dedicated person committed to handling theft, despite the leaps in technological assistance. However, Loss Prevention Media notes their position is rapidly changing.

“…the role continues to evolve as the challenges morph in an ever-changing game of cat and mouse between the criminals and fraudsters and the LP practitioners and law enforcement community,” they explain.

They further note, where once the position was filled by a former law enforcement officer or trained security guard whose success was measure on the number of arrests, now the job can extend to cyber security, technology implementation and monitoring, and more.

“Depending upon the online presence and footprint of the retailer, the types of jobs sought can now differ significantly to match this demand—from physical security personnel to more analytical roles—those who are able to map the crime to meet the requirements of securing a successful prosecution.

“This development has hugged the contours of the changing landscape and topography of crime. There is a shift from external store threats to online and omni-channel fraud where account takeovers and bogus identities are the order of the day, and the perpetrators are ‘virtual’.”


Know your weakness

There’s an old saying in business that “what cannot be measured cannot be improved”, and according to experts that’s certainly true for loss prevention. One of the most effective tools for reducing retail shrink is to identify areas of weakness through regular audits, reconciliations and stock taking.

This helps identity what products are being targeted, where in the store shoplifting is occurring or where in the supply chain items are going amiss. Then staffing levels, layout, and procedures can be improved in the relevant area.


A multi-pronged approach

The reality is few loss prevention techniques work in isolation. Staff training, store layout, and security personnel should be considered just battalions in an army designed to combat retail shrink. The most successful retailers combine a physical presence with technology including CCTV, electronic article surveillance, RFID and retail analytics.

Together these work to identify where loss is occurring, reducing the potential for shoplifters to steal and catching any thieves in the act. It’s a multilayered approach that at its most effective sees merchandise safeguarded from the point of supply right through to the moment it legitimately leaves the store. And that goes a long way to combating the costly and preventable loss of retail shrink.