The National Retail Federation recently held their annual Loss Prevention Conference, which focused on risk management strategies and theft prevention solutions for retailers across the nation. Inventory shrinkage can be a terrible problem for many Southfield retail businesses. Shrinkage refers to the difference between the amount of inventory that a retailer is supposed to have and the stock which they tangibly possess. Inventory loss can be attributed to a number of factors including employee theft, shoplifting, shipping and ordering errors, vendor fraud, damage to products and accidental employee error. The retail industry loses over a hundred billion dollars’ worth of property each year as a result of shrink, which can have devastating implications especially for small businesses.
The three main contributors to inventory shrinkage are employee dishonesty, shoplifting and product damage. While all three are hard to eradicate, there are many precautions business owners can take to minimize the amount of product shrinkage they experience.
When handling employee theft, consistency is essential. It is best to ensure that all employees are aware and informed in writing of the code of conduct as well as the consequences of noncompliance. Having documented policies detailing the proper course of action for accusing an employee of stealing, or other wrongful conduct including non-adherence to company policies and standards, can help employers avoid a wrongful termination lawsuit or other legal complications that may arise when the employee is confronted about their conduct.
Shoplifting remains a classic dilemma for retailers despite technological advancements and improvements. While product security and tracking technology both play a vital role in deterring product theft, shoplifters are increasingly aware of the latest technologies and how to avoid many security measures. One of the best tactics for you and your employees is to still physically monitor inventory as much as possible. The more a shoplifter feels they are being monitored, the less likely they are to attempt to walk away with your products. Storing valuable items in harder to reach locations, such as top shelves, can decrease the likelihood that they will be taken. Furthermore, keep valuable items locked and stored in alarmed cases which are within direct eye sight from the point of sale can also decrease their risk of disappearing. Alert and attentive employees can help monitor products while assisting customers on the sales floor, and security camera systems can help keep tabs on the storefront from above.
Product damage is often hard to minimize because there are so many external hazards that are not within your control as a business owner. Your products may be damaged in transit by a careless courier, by accident while being sorted and shelved, or even by clumsy shoppers while rummaging through your merchandise. Proper product handling and storage can only protect your wares to a certain extent; there is always the element of an unforeseen circumstance which can threaten the security of your goods.
As a merchant your livelihood depends on the security of your products, which can be threatened by a wide variety of risk exposures. These exposures can include everything from problems related to the physical structure of your establishment to employee dishonesty and even potential law suits from unsatisfied customers. At Capital Insurance, our Southfield Retail Insurance specialists can help make sure that your operation is covered against unforeseen circumstances. Our Michigan Retailer/ Wholesaler Insurance solutions can provide you with comprehensive business insurance coverage at affordable rates. For more information about any of our coverage options call us today at 888-296-0418.