According to a recent study by the National Retail Federation, Retail Fraud and Shoplifting rates are decreasing. Aggregated responses suggest that shrinkage decreased to 1.44 percent of retail sales in 2009 vs. 1.51 percent in 2008.
That’s good news as total losses from fraud cost retailers $33.5 billion last year. The lower shrinkage rate saved retailers $3 billion in 2009.
Shoplifting and internal theft are the major culprits in retail fraud, accounting for nearly 80% of the losses and over $26 billion according to the survey.
THE REAL WORLD RETAILING TAKEAWAY
If you don’t think you have a fraud issue, you should close up shop.
The fact is that nearly every retailer has some type of fraud. Even if your employees have been with you for decades, you still could be a victim of shoplifting, vendor fraud or other types of retail fraud.
Since the biggest losses stem from employee theft and shoplifting, it’s best to focus on those areas.
For employee theft:
- Make sure you have clearly outlined procedures for opening and closing the store, including how to close out the tills, make deposits, etc.
- You should also be reviewing the reports on discounts and promotions – look at the totals as well as scan reports that show “rings” by each employee so you can spot trends. Anything that looks out of the ordinary probably is.
- Additionally, you should have a bag check policy where all employees must leave by a single door, and have their bag checked by the manager on duty. No one is immune and the manager and even the owners need to have their bags checked as well.
- Employees have been known to shoplift by throwing goods into the trash, then taking the trash out, then recovering the goods when they finish their shift. Keep a keen eye out.
- More and stores have installed cameras as a deterrent, both for employee theft and for shoplifting.
- Make sure your store is as open as possible, with lower fixtures and shelving if possible so you can keep an eye out for suspicious activity. The more hidden nooks and crannies you have, the bigger the opportunity for theft.
- Keep fixtures away from doors as well as shoplifters can simply pick up something and drop it in their bag on the way out the door.
Retail fraud is a huge issue, no matter what size retailers you are. If your annual shrinkage (after you conduct inventory) is above 1.5%, chances are part of that is due to retail fraud. Take steps today to counteract it – after all, reductions in shrinkage are pure profit, and that’s something we all can use today.
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