Stop Business Shrink: Loss Prevention Strategy and Tips

What would you do with $112 BILLION in your pocket? That is a question that retail business owners across the world should be asking themselves, because according to the 2012-2013 Global Retail Theft Barometer, a total of 1.4 percent of retail sales – equating to over $100 billion – were lost due to shrink. This isn’t an epidemic that only strikes large retailers or tiny shop owners – it’s a burden that a business of any size has to bear.

While shrinkage can be attributed to numerous causes, such as vendor fraud or administrative and paper error, the bulk of the issue lies in internal employee theft and external shoplifting. Before you go counting your losses, here are some tips to help business owners execute effective loss prevention strategies and reclaim their part of the money pie.

Promote a Security-Conscious Environment

The fight against employee theft begins at the interview. Make an effort to hire honest employees. This can be done through interviewing techniques, written honesty tests, and most importantly by carefully checking references. Clearly communicate a zero-tolerance policy towards theft, both internal and external.

As an owner, there are simple processes you can put in place to control employee transactions and cut down the chances of theft:

Woman at cash register
  • Require management approval on all refunds and credits.
  • Make sure all employee purchases are rung up and checked by the owner, manager or another trustworthy, designated person.
  • Keep strict control over sales tickets, gift certificates or any other types of forms that can be used by an employee to obtain cash or goods.
  • Review each day’s transactions in front of your associates for accuracy as well as paying attention to suspicious activity, such as an employee regularly voiding cash transactions.
  • Give employees their own password or number to use at the register to ensure you know who is responsible for every system action.

The layout of your store can also aid in manual surveillance of employees, consumers, and goods. For example, expensive items should be showcased behind a counter or in a locked display case. Keep your store neat and uncluttered because organized displays make it easier for salespeople to spot missing merchandise.

Avoid blind spots on the sales floor, and ensure customers have to pass by the register area and staff in order to exit your store. Merchandise should not be kept too close to the exits to avoid an easy grab and go.

Well-trained and attentive sales personnel are your best defense. Alert, courteous salespeople can deter many would-be shoplifters by their mere presence.  Make sure they are properly trained to spot suspicious behavior and know what to do if they see someone taking merchandise. 

Employ Effective Technology

Security cameras, both hidden and visible, continue to be a valuable deterrent to theft. New HD Analog security systems provide full-color, high-definition images that are easily recorded and reviewed. The most effective places to install your surveillance cameras include around cash registers, over back door or dumpster areas, and in storage and layaway sections of the store.

Review your security camera footage each night to monitor odd behavior associated with theft or shoplifting. Let your employees know in a subtle manner that the security cameras are working and are checked often.

Hidden cameras can be especially effective against employee theft. Your employees know the layout of a retail store better than anyone, and they are familiar with where the security cameras are located.

Hidden cameras that are built into common items such as smoke detectors, electrical boxes, clocks, and other nondescript devices will escape notice. Using these hidden surveillance cameras keeps store employees from taking advantage.

As a business owner, there are many steps you can take to protect yourself against shrink. Make sure you continue to evaluate your loss prevention strategy to ensure the money that comes into your pocket stays there.

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