Waste Not, Want Not: Keeping an Eye on Losses

There is no distinctly American criminal class except Congress.
— Mark Twain

Ever notice how videotaped images of people in the act of robbing a bank or a convenience store are almost always of very bad quality. In fact, it’s often a challenge to make out the face at all. Surely video technology is advanced far enough that one should be able to capture crisp, Hollywood-quality images every time. It’s as if the business owner knew that it was important to install security cameras but didn’t really want to commit the money to buying good ones, and no doubt got a good deal from someone’s brother-in-law who said he could set them up with a whole security package for next to nothing. And in most cases, next to nothing is what they got. That’s more or less the approach many retailers take to store security and managing shrinkage. They know they should do it but there always seems to be something more important to spend the money on. Hindsight being what it is, these same retailers usually resolve to do something about their losses via better vigilance, better security systems, and paying more attention to what’s going on in the back room, but they’ll do it next year. In the meantime, profits are draining out the back door in the form of mistakes during receiving, scams, unintentional customer shortages, shoplifting, and even employee theft. None of this is meant to make you worry even more. Don’t get paranoid — instead, get busy by taking a look at your cash flow, the cash that is flowing out the door that is.

The Customer is Always Right
Last June in Minneapolis, at the Expo for the International Dairy•Deli•Bakery Association, Harold Lloyd gave a presentation entitled, “Creative Ways to Rip You Off.” The ideas and theories presented in his lively and often humorous seminar sparked ideas of my own, based on many years of retail experience, and inspired this story. One of the most incisive points made by Lloyd as he dazzled the audience with his wit, insight, and a great slide show culled from his extensive travel around the country visiting stores was that in the battle against store shrinkage — and outright theft, three perpetrators should be considered: Your employees, your vendors, and your customers (which includes shoplifters who may or may not also be customers). He wisely pointed out that there are also three levels of shrinkage: Honest mistakes, deceptive practices, and out and out theft. It might be a safe bet that the middle choice is the one least considered by most store owners, and while it may not be the biggest in terms of dollars lost, it may be more significant than you suspect.

One of the oldest adages in retail, “the customer is always right,” is also a cause of shrinkage. They don’t do it intentionally but it happens. A particularly odiferous or moldy cheese,