Retail Shrinkage Management
The retail industry is a very dynamic industry that attracts more retailers into different retail segments. However, as more retailers set up shop, the industry is faced with fresh challenges. The biggest challenge that most retailers face is protection of assets. Assets do not just mean the building or other facilities or amenities at the retail store. For any retail outlet, its inventory forms the major chunk of the assets. It is the inventory that contributes to the retail store’s profitability and continued existence. Despite enhanced security measures, shoplifting and organized retail theft are a reality.
Each year the retail industry in the US loses billions of dollars to retail theft. According to industry estimates, in 2009 alone the retail industry lost approximately $40 billion. In an industry where the margins are in the range of 1% or 2%, this actually presents the retailers an opportunity to reduce shrinkage and protect their margins.
Retail Shrinkage – phenomenon or not ?
For many retailers retail shrinkage is not a new phenomenon. A large number of retailers in the recent years have taken a wide range of measures to get a grip on the situation. Unfortunately, these measures have met with limited success since most measures are taken without proper planning. This is precisely the reason why most retailers have not been able to resolve the issue of retail theft.
A major problem that most retailers face is allocating accountability. Quite often they are unable to come up with solid evidence that can prove an instance of retail theft. The biggest challenge facing retailers today is to identify where the problem lies and how best to utilize the company resources to address the issue of retail shrinkage. It is important that retail theft training is provided to the store staff so that there is a greater degree of focus on asset protection.
Most retail shrinkage removal techniques fail due to lack of proper facts and data, failure to identify the actual problem, not taking a disciplined approach to resolve the issue of shrinkage and failure to maintain sustainable shrink reduction practices. However, you can avoid these mistakes and reduce the incidences of retail theft or shrinkage without actually harming your bottom line. This is possible by developing retail shrinkage detection techniques based on proper analysis and retail expertise. Let us understand how this works.
When trying to understand the magnitude of the problem, most retailers admit that retail shrinkage is a major issue. However, they do not have any solid data that can actually help assess to what extent this problem has impacted the business. It is important that retailers invest into new processes and the latest systems to understand the actual extent of retail shrinkage. Having an accurate data will enable you to conduct an accurate analysis.
Retail Shrinkage Measures
Many a times what we think is the core issue may not be the real cause at all when it comes to shrinkage. As a retailer it is important that you identify and address the core issue so that you will be able to find a measurable and sustainable solution that will work for a long time. Remember, identifying the primary reason is of utmost importance to resolving the issues of retail shrinkage. This will enable you to take organized retail theft prevention measures to tackle the issue.
Quite often, retailers address the issue of shrinkage as one major problem. However, to find successful and lasting solutions, it is important that you break the issue into small and manageable components. This will help you identify the shrinkage levels item wise, category wise, department wise, area and region wise. When you are able to look at the issue analytically, you will be able to put in place organized retail theft protection measures through dedicated team leaders and staff members and monitor their progress.
Finally, once you are able to identify the actual cause of the problem, the challenge lies in finding a solution that will address shrinkage issue for your business successfully.