According to the National Retail Federation, inventory shrinkage is largely attributed to shoplifting (36%) and employee theft (33%). Shrinkage can be determined by comparing the value of your inventory versus the total inventory you have- losses during transportation, storage or in retail are subtracted from your original inventory value. Along with shoplifting (external theft) and employee (internal theft), missing inventory is 19% due to administrative errors, 6% is due to vendor fraud and 7% is due to unknown causes. Overall, these numbers account for $46.8 billion in losses for the entire US retail economy.

So, how do we reduce the two largest contributors of shrinkage?

Shoplifting ExamplesSolutions
• Merchandise theft by visitors
• Refund abuse: customers steal goods, attempt to return for cash or customers purchase goods with fake money and attempt to return for cash.
• Video surveillance
• Signage highlighting video surveillance
• Thorough employee policies for refunding
• Physical guards
• Good lighting & layout throughout the store, reduce hidden areas/corners
• Customer service: eye contact, greetings can make the statement that people are patrolling and aware
• Electronic tags
• Employee training on how to ID external thefts
Employee/Internal Theft ExamplesSolutions
• Merchandise theft
• Excessive discounting to family/friends
• Falsifying returns
• Processing fake gift cards
• Cash drawer theft
• Video surveillance
• Signage highlighting video surveillance
• Thorough hiring process, know who you’re hiring
• Good employee training to prevent errors, ensure consistency
• Positive work environment: an employee is less-likely to steal from a company that respects and invests in them

For more information on Loss Prevention solutions, contact us today! We’re here to help with any and all Loss Prevention questions. Contact Us.

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