Managing shrinkage is a global challenge for retailers—and it’s impacting their bottom line.
The Australian Retail Association says retail theft costs the industry up to $9.3 billion annually—that’s 3 per cent of total turnover. Elsewhere, the Global Retail Theft Barometer estimates that in Australia shoplifting is to blame for 39 per cent of stock loss, with a further 25 per cent due to employee theft.
Follow these five tips and don’t let shrinkage get the better of you and your business
1. Hire the right people
Your staff shape your business culture and are pivotal in its success or failure. Getting recruitment right not only improves your customer experience and reputation—it can also significantly reduce shrinkage.
Look for candidates who are a good fit for your workplace and who will be invested in the company’s future. A robust hiring procedure includes thorough face-to-face interviews and paying close attention to experience and credentials to understand motivation, values and aspirations.
Check every candidate’s references to ensure they have worked well with others in the past and for evidence of their honesty and dedication.
2. Be firm but fair when managing staff
To prevent stock loss from eating into profits, you need clear and effective rules and expectations as part of the onboarding process that will signal what is considered inappropriate behaviour from day one.
Enforcing written expectations is even more important. Employees should be held accountable for their behaviour. Having the rules written down also gives you a documented agreement to refer to if staff violate workplace expectations—including any consequences.
And make sure you’re providing recognition for positive behaviour you want to encourage. If staff know their actions are noticed, they’re more likely to feel valued—and less likely to break your trust by stealing stock.
3. Think about security in your store layout
Locate items of high value towards the back of the store and keep expensive products behind lock and key to minimise grab-and-run theft. Ensure all products are within view of staff, so your employees can prevent theft before it happens.
4. Audit stock more frequently
Conduct audits as frequently and consistently as possible. Regular auditing allows you to order the correct amount of stock—and that not only reduces the risk of stock loss from the storeroom, it minimises fresh food spoilage and avoids excessive markdowns.
Technology like iAuditor makes stocktake much faster and provides immediate access to stock data for easy analysis. Simon McBurney, Senior Delivery Analyst at Coles, says they use iAuditor to adhere to strict food safety laws, “giving customers a shop they can trust.”
Leading UK sports retailer JD Sports’ Head of Retail Profit Protection, Ben Deeks, says iAuditor helped the company increase to three audits per month, cutting down stock loss and increasing efficiency in their stores.
5. Implement a centralised, automated system
Thankfully, the days of clipboard and paper auditing are over. With iAuditor, stock discrepancies can be investigated promptly and stock planning is more accurate and efficient, leading to significant savings.
Enrique Espinoza, Process Improvement Manager with US retailer Lowe’s Home Improvement, says his team of 10 auditors saved nearly $US1million in 2016 by using iAuditor. From this point, Enrique never looked back, explaining, “it gives everyone in the company, from field employees to directors, visibility over the entire organisation”.
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