Basic Steps For Profit Improvement
In order to remain viable, every business must successfully execute a number of critical factors including creating brand loyalty, generating sales, controlling expenses, and effectively dealing with all aspects of loss. One significant area of loss that businesses face everyday is theft, both internal and external. Whether large or small, a businesses ability to effectively control this area of profit drain can make the difference between the success and failure of the entire business. This article will address some basic, yet very important, steps that every business can easily implement in order to lower their exposure to theft.
Successful Hiring Practices
Hiring the best people for your business is one of the most important responsibilities of every business owner, yet it does not always receive the attention to detail that it deserves. Too often these decisions are made based on a short timeframe to fill a position and without verifying the past employment history of the applicant.
Basic caution requires a close review of the application. Will their prior experience bring any specialized knowledge or training to the job you are interviewing them for? Ask the applicant to explain any gaps in their employment. What were they doing during those times? Any jobs which lasted less than one year should also be reviewed. Why did they leave after so short a time?
Lastly, make the effort to contact their most recent Supervisor. While most former employers will be hesitant to discuss serious performance issues, no one really avoids saying good things about previous employees. If you know you are speaking with the former direct supervisor of the applicant, and that person indicates that their company policy allows them only to discuss dates of employment and salary paid, ask if they would consider rehiring the individual. This hesitation to discuss the applicant really should give you all you need to know whether or not you are hiring someone else’s problem.
Trust But Verify
Sam Walton, Founder of Wal-Mart Stores, often used a personal example when emphasizing the importance of maintaining basic checks and balances within the business. When he and his brother Bud were co-owners of a small variety store they ran together, Sam would say that while he trusted his brother—he always counted his register down to make certain it balanced.
While it is human nature to trust the people you have put into responsible positions within your business, you must always verify that proper procedures are being adhered to. Mr. Walton referred to it as “Keeping honest people honest”. Just the mere fact that your employees know that you will routinely and arbitrarily verify the legitimacy and accuracy of various aspects of the business (refunds, register transactions, cash shortages, voids, etc.) will act as a significant deterrent to any ideas of wrongdoing.
Aggressive Hospitality
One of the most effective deterrents to shoplifting is to train your employees to approach and speak to every customer that comes into their area of the store. A simple “Hello. Can I help you find something?” is a greeting that is always appreciated by your honest customers—even if they do not need help. Someone with dishonest intentions, however, will not want to be noticed or have attention brought to them, and may elect to leave your store. This same approach works especially well with those individuals who you suspect of being a shoplifter, and helps avoid a possible confrontation. A shoplifter that thinks they have been identified is less likely to return to your store in the future.
Track Losses & React Accordingly
Reducing losses is a function of knowing where these are occurring, and taking specific actions which will reduce or eliminate them. Depending on the level of detail available to identify the specific items being stolen, these actions can be tailored to have the greatest immediate as well as long term impact.
In some instances, the first indicator of a theft issue will be empty packages that are found somewhere in the store. In these situations, a process should be established to log or track these to establish a pattern for the amount of the losses and the locations inside the store where the concealment occurred. Utilizing some basic deterrent measures in these areas, as discussed below, can help reduce these losses.
Consideration should also be given to challenging the supplier of the products involved to improve the quality of the packaging used in order to make the item more difficult to remove and/or conceal. Studies have shown that more robust packaging can have a significant effect on losses, while not altering your customer’s ability to easily access the product.
Incorporate Basic Deterrent Measures
There are a number of simple and low cost measures that can be taken to address shoplifting problems. These actions can have a significant impact on losses. For example,
- Security Announcements—Use your PA system to occasionally make an announcement similar to “Security, please respond to Area B”. No one in the store will really know where “Area B” is located, so you will not risk offending any honest customer in the store. Shoplifters, however, will be concerned that they may have been spotted and will consider leaving the store.
- Shoplifting Signing—Generic signing is available, or can easily be internally produced, which highlights a company’s policy toward shoplifting. Simple wording such as “In order to keep our prices low, we prosecute all shoplifters to the full extent of the law.” These signs can include a picture of a CCTV camera to imply that a security system exists, and be small enough (3” X 5”) in order to be placed in those shopping areas of the store where high theft items are displayed or where empty packages have been found in the past.
- Control of High Theft Items—Where basic measures have failed to control losses of certain high theft items, consideration must be given to securing the items or to placing them within view of a cashier or other store employee who can deter their shoplifting. Where feasible, policies can also be implemented which ask for high theft items to be paid for within a controlled area rather than being taken elsewhere for payment.
- Use of CCTV—Controlled use of a small number of CCTV camera’s and public view monitors can be a relatively low cost way of providing a long term deterrent to shoplifting and internal theft. It is important to note, that while your honest customers will likely notice the existence of the camera’s, they will not see these systems as involving them in any way. Shoplifters will see the systems as a threat. To emphasize this point, surveys of convicted shoplifters conducted by the National Association for Shoplifting Prevention have shown that 87% of adult shoplifters and 85% of juvenile shoplifters stated that the presence of CCTV and security cameras was an effective or extremely effective deterrent to their activities.
Profit loss due to inventory shrinkage is a problem that all retail businesses, both large and small, must deal with everyday. It is, however, an expense that is controllable with the training and implementation of the basic solutions described above. While it is not realistic to think that all shrinkage can be deterred or eliminated, it is very realistic to assume that the overall level of loss can be kept to a level that allows for the profitability needed to continue growing the business.