Retail shrinkage cancels millions of dollars in sales. That means all of your hard work for an entire year can be wiped out by a single retail shrinkage loss.
Our goal as business managers is to get retail shrinkage and retail loss down to a manageable level. We will never eliminate it all together. However, we can push retail loss down and maintain it at a point where we can predict and budget for it.
What steps do you take to prevent retail shrinkage losses?
Let’s examine some of the common inventory shrinkage problems:
- Pricing errors
– Inaccuracy when pricing
– Low price on item
– Incorrect tag on item
- Missing SKU/price tickets
– Sales at the wrong price cause lost profit
– Extra time is involved in tracking down correct price
- Receiving errors
– Accuracy in counting
– All items must be correctly piece counted
- Illegible or incorrect writing on documents
– Written information must be easy to read
– Information must be accurate
- Padding inventory
– Gives a false picture of the company’s profits
- Merchandise or product transfer
– When a transfer is not generated, retail shrinkage is created for the sending store or unit
– Incorrect transfers create retail loss
– Makes a substantial impact and can add up quickly
– Shoplifting must be accounted for through incident reports and then writing off the items
– Losses also include empty packages, price tickets hidden in bathrooms, etc.
- Register discounts
– Discount errors create retail loss
– Only management should authorize discounts
– Management must insure the correct amount of discount is taken
– Deception constitutes fraud
- Fraudulent or improper refunds/returns
– Evaluate each situation
– No receipt could mean possible shoplifted
– An associate’s best friend with receipt and no merchandise.
Retail Return Policy
A good return/exchange policy should contain the following items:
A time limit for returns and exchanges should be made. For example, no returns are allowed after 30 days.
If an exchange is given, the original item should be circled and noted on the customer’s receipt. A new receipt should not be given to the customer.
Receipts should be required (train the customer). If a receipt is not available, then ask for proof of purchase such as a canceled check or charge statement.
– The “number one” way employees steal cash
– Associates void legitimate sales and steal the cash
– Investigate voids without management approval
Fraud or improper use of time card
– Ghost “employees” created in order to collect pay
– Clocking in or out for another employee
For more information on retail shrinkage contact us at: retail loss or call 1.866.914.2567