How Retailers Can Improve Their Loss Prevention Strategy

Often, it costs very little to make a big difference to your bottom line in retail.

Published on 15 February, 2017 | Last modified on 1 November, 2022
Loss Prevention Can Impact Your Bottom Line 2

Preventable profit loss. That’s inventory your business loses to stealing or error. Fortunately, retail loss prevention strategies cut profit loss caused by shoplifting or theft committed by employees. Additionally, these strategies minimise inventory reduction due to operational error. In most retail sectors, thin margins mean that this loss of inventory can be the difference between making and losing money.

Your employees are on the front lines of loss prevention. Put these strategies in place to preserve your profits during the next series of employee training and in-store meetings. Often, it costs very little to make a big difference to your bottom line.

Friendly Floor Staff

Shoplifters get away with crime when they slip by unnoticed. Many retailers choose to “customer service” everyone who comes into the store to discourage theft. That means greeting customers at the door, saying hello in the aisles and offering to help them find products. This simple technique deters most thieves from trying to walk away with stolen items.

Loss prevention officers (LPOs) are central to your strategy.  LPOs work in the store with the sole purpose of preserving profit. Employees dedicated to loss prevention make sure profit preservation is a priority and not merely one of a laundry list of daily tasks. Although all employees should exercise engagement with customers, LPOs make it their top priority. These employees actively monitor customer activity and intervene when something seems amiss.

Open Floor Plan

Take a good look at where your merchandise is placed on the retail floor. Make note of expensive or high-theft items stocked without extra security measures or away from staff. Display pricey goods in a locked case, or in a place where staff can easily keep an eye on them (like near the cash register).

Ideally, staff should be able to scan the store from a distance. If a thief is able to hide in any corners because of high shelves, consider redesigning your layout. Keeping the store tidy, with neatly faced and well-organised stock, makes it more difficult for shoplifters to hide their intentions. A clean store makes it easy to see what’s missing on a shelf or display.

Staff Education

Employees are a primary cause of loss of inventory. Staff theft may be intentional, although not overt. Common forms of staff theft include:

  • Use of discounts to provide price breaks to family and friends
  • Pocketing store supplies for personal use
  • Keeping damaged items that should be returned to suppliers for credit

Training staff about the proper use of store property helps prevent these activities. As well as including this information in employee manuals, consider posting informational posters in break rooms and around departments. Posters give workers a gentle reminder of how to properly handle store inventory.

Fundamentally, you want your staff to promote a culture of loss prevention. A culture of loss prevention encourages employees to accurately key sales. Likewise, it discourages diversion from established policies about discounts and returns. This ultimately involves staff at all levels, from front shop employees to managers.

Train Staff on Loss Prevention Strategies

Internal Procedures

Employees can also inadvertently cause loss of inventory by not following established procedures. If you lack procedures or fail to implement them, you can experience losses. From receiving stock to selling inventory, it’s important to fill any gaps in the supply chain where simple mistakes can result in waste or error.

Start with the cash register. Ensure your procedures result in a full accounting of sales and payments. Cash shortages or returns without receipts can indicate someone is siphoning money. Clock the number of “no sale” transactions. This is one way you can monitor how often the drawer is opened when there is no customer around.

Staff at your receiving desk should also double-check all orders that come in to make sure the store isn’t overcharged. Too often, employees sign off on incoming inventory without counting the number of boxes and their contents. Any time you pay for something you didn’t receive, you are losing profit.

Teach staff how to deal with returned or damaged items. In many cases, you can receive credit from the supplier or simply restock the item and sell it at a discount. Taking the item out of inventory and throwing it away results in a loss of the cost of that item and neglects to recover the investment.

Create a Culture of Store Pride

Everyone in the store must work together to identify and prevent inventory loss. At the core of any strong loss prevention program are employees willing to work together towards a common goal. By taking pride in their work, employees are less likely to bend the rules or disregard a policy they know is on the books.

To create that company culture, support and empower employees in everything they do. Let them know they are appreciated and an important part of the team. Hold regular and brief sessions that review:

  • Guidelines for returns
  • Use of employee discounts
  • Damaged items
  • Incoming inventory

With these rules and reminders in place, team members are more likely to adhere to them.

Loss prevention is as important to your store’s success as marketing and customer service, so give it the attention it deserves. Often, just a few key steps make a significant difference.

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