Page 88 - DMGT553_RETAIL_STORE_MANAGEMENT

Unit 5: Retail Arithmetic

Shrinkage from all causes has become a bigger problem than ever, particularly for first-time Notes
retail business owners for whom paperwork can easily become an overwhelming chore. In fact,
the problem has become so prevalent that a 2% loss in shrinkage is a standard of the industry
today.
A positive change in the cost of goods has a huge impact on your bottom line. Unfortunately,
shrinkage has exactly the same effect—in reverse! In addition to keeping careful records, there
are several things you can do to curb shrinkage.

Employee Theft

Your employees should be the last people to steal from you. After all, you’re the one signing
their checks! Unfortunately, the opposite is true: most employees steal from their employers.
The incidence of employee theft is high in retailing. Employees have greater access to a wide
range of consumer goods that they either desire for themselves or know they can resell on the
black market.

Moreover, employees often view what they take as trivial and don’t consider it stealing. The
office employee’s equivalent is taking home some ballpoint pens and pads of paper. However,
trivial or not, these thefts add up, and their financial impact goes way beyond the items stolen
because it reduces your store’s productivity, lowers turnover, inhibits hiring, and makes your
store less viable.
In addition to casual pilfering, you may well face planned thievery, the willful theft of
merchandise, supplies, or cash. Conspiracy with shoplifters or delivery persons is also common.

Shoplifting

Shoplifting is a major problem, especially of smaller, easily hidden items in general merchandise
retailers, and of expensive items in larger stores. While most shoplifters simply try to slip some
easily hidden items into their pockets or bags, some shoplifters are more sophisticated.

To give you some idea of how tricky they can be, one of their favourite tricks works like this:
The criminal legally purchases an expensive article of clothing or an electronic device, takes it
out of the store, removes the tags, leaves the item outside, and returns to the store with the tags
and the receipt. Back inside, the thief picks out an identical item, takes it to the dressing room or
some quiet corner of the store, and removes the tags. Next, he or she takes the item, without the
tags, to the return desk, hands it and the receipt and tags from the legitimately purchased item
to the harried clerk, and receives a refund. Unless a store security person actually catches the
thief removing the tags, it’s hard to prove that the second item is not the first one. Even if each
item is numbered sequentially so the serial number on the item does not match the receipt
(something the clerk at the return desk is unlikely to notice) it is difficult to use that as proof of
a scam when the thief can claim that the serial number was incorrectly recorded on the item.
Some thieves even have the gall to go to another store in the same chain and return the first item,
claiming they lost the tags. Others sell the items to a fence.

Strengthening Store Security

A secure store is a store that is experiencing less shrinkage than its competitors. Security may be
costly, but so is shrinkage. Often the mere appearance of security, to both your customers and
your employees, is enough to do the trick. Here are some timely tips for strengthening your
store’s security:
1. Equip the store with a security alarm system hooked up to a central service company. Give
each employee his or her own code so you can monitor who comes and goes.

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