Retail Store Shrinkage- Safety Tips
Shrinkage is the loss of merchandise (theft) or money (fraud) that has disappeared with no logical explanation resulting from dishonest employees or poor accounting practices. Shrinkage does not have to be an accepted fact of doing business. Loss of profits due to theft, shoplifting, poor accounting procedures, theft of money or merchandise from a dishonest employee can be reduced, controlled and even eliminated when safe business practices are implemented. As a valued customer of Hobson Insurance, we would like to provide you with some safety tips and guidelines to help reduce the occurrence of shrinkage in your retail environment.
There are two overall safe business concepts that are used to control shrinkage:
- Reduce size of the target: implement business practices to detect theft/fraud at an early stage.
- Harden the target: Increase security to make money and target merchandise harder to steal.
The more safety practices that you have in place the more your shrinkage problem will be reduced. We have provided you with the following safety practices groups to review and be included with your locations current safety and business practices.
Employee Hiring
Important steps can be taken when hiring new employees that can help reduce shrinkage by performing criminal background checks, drug testing programs, checking references with previous employers and by performing a personal interview. After the hiring process plan regular meetings with your employees to promote the awareness of employee theft, fraud and the business practices and safety measures that are in place. Encourage open communication by recognizing good safety practices and positive performance.
Shoplifting:
- Train employees in shoplifting prevention and intervention procedures.
- Store entrance and exit are near check out area.
- Place high value merchandise behind barriers or display counters or contained within a glass case.
- Use a locked security cable to contain patron accessible merchandise.
- Make eye and voice contact as customers enter the store.
- Place high value merchandise near check out area.
- Arrange store merchandise displays to allow for open view.
- Inspect contents of open boxes or containers at check out counters.
- Employees should not become distracted when showing patrons high value merchandise.
- Install a security camera in selected areas with recorded viewing.
- Install electronic merchandise sensor at store exit door with audible alarm.
- Installation of a "fake' security camera can be an effective theft deterrent.
- Store policy of cash for returned merchandise only with a valid sales receipt.
Check Cashing/Credit/Debit Card:
- Use a card verification service.
- Verify signature on the card resembles signature on sales receipt.
- Request valid identification with purchase such as a current driver's license.
- Checks are accepted only for amount of purchase.
Merchandise:
- Position security cameras in areas with high value merchandise both in retail and storage areas.
- Narcotics and controlled substances should be under double lock and key and inventoried daily.
- Trash is placed in clear plastic bags to allow good visual observation of contents.
- Security electronic merchandise sensor is positioned at store exit.
- Employee entrance and exit through customer doors.
- Maintain a log for merchandise shrinkage: increase inventory frequency.
- New merchandise shipments are inventoried for correct type and quantity. Note any discrepancies.
- Store policy: employees leave large purses or "work out" style bags in vehicles.
- Provide an employee break or locker room separate from high value stock.
Daily Receipts:
- Security camera positioned on cash register area with pictures saved for 30 days.
- Cash register money drawer counted by supervisor and secondly employee.
- Change in cash register employee: money in drawer counted by employee and supervisor.
- Audit cash register drawer for record of sales and returns.
- Audit daily cash register receipts for correct employee commission sales.
- Cash given for returned merchandise only when there is a sales slip.
- Checks accepted only for amount of purchase.
- Checks received are stamped "for deposit only".
- Bank deposit slips prepared by one employee and reconciled by second employee.
- Audit records by internal team or independent Certified Public Accountant at least annually.
Hobson Insurance is your recommended Insurance Provider. This Trusted Choice Independent Agency represents multiple national insurance companies and all lines of insurance. Member savings can be found on Property, Liability, Workers Compensation, Business Auto, Bonds, Directors and Officers, Fiduciary Liability, Employment Practices, Cyber Liability, Health,Life, Home and Personal Auto Insurance. Additional information is available on loss control as well as Cost Saving Strategies.
