Every year shrinkage cost retailers globally 123.4 billion USD*. For a retailer, already struggling with increased competition and tight margins, this is money right down the drain.
More than 75 % of this shrinkage comes from shoplifting and dishonest employees. Having met and spoken to retailers ranging from small, local coffee shops to global hypermarket chains in every part of the world we know that this is no geographical, cultural or demographical phenomenon. The truth is that some of your customers and employees will actually steal from you.
And even worse is that your employees steal over six times the amount stolen by shoplifters on a per-case comparison**.
It’s often products that are small in size and easy to conceal that are stolen. For a typical grocery retailer this could be batteries, razor blades, non-prescription drugs or mobile device accessories. For the apparel industry it’s often footwear and make-up.
So we know this issue remains a constant headache for retailers, eating away on their bottom line. So what can be done about it? We’re seeing an increase in CCTV in shops and public areas. But as you also want to attract more customers by having a welcoming store, what do these cameras do to enhance customer satisfaction and ultimately create customer loyalty? Being under surveillance isn’t exactly my idea of a pleasant shopping experience.
I believe you need to take a holistic approach to this challenge.
First make sure you recruit the right people. A thorough recruitment process with a background check could increase the chances of getting loyal and honest employees.
Second it’s not all about dishonest people. You need to look at price integrity in your store. Shrinkage often occurs when a product has the wrong price registered in the system. This is human error – not a dishonest employee. The same applies to inventory accuracy and internal control. Shrinkage occurs in every part of your business – not just in the front of the store.
Third consider if and how you can move some of your most exposed products (perhaps razor blades, non-prescription drugs or cigarettes) to an intelligent and secure shopping solution. Through the use of touch screens your customer can chose items from a list instead of physically pick it from the shelf. Then the customer proceeds to pay at the checkout and then retrieves the items from a dispensing unit placed conveniently outside the checkout lane. This eliminates the shrinkage on those products.
So, although every retailer needs to spend time understanding new trends in shopping behaviour and evaluate new technology to meet your future challenges don’t forget that there are existing proven technology solutions out there that address your current challenges and protect your bottom line. The money you save from today’s shrinkage could finance tomorrow’s investments.
*Global retail theft barometer 2014-2015
** Hayes International