Inventory shrinkage (loss of inventory due to employee theft, shoplifting, vendor fraud etc.) continues to be a serious issue for retailers – both large and small.
In fact, according to the 2019 National Security Survey, industry-wide shrinkage was estimated to be $50.6 billion. Thus highlighting the importance of having a loss prevention plan.
So, to help you establish a plan of your own, we’ve put together some tried and tested tips and strategies. Check them out below!
What is retail loss prevention?
The loss associated with shrink is two-fold; you’re losing your initial investment in the merchandise itself as well as the revenue that the product could have generated with sales. This doesn’t even include reduced customer satisfaction due to stock-outs.
Which is why store owners should consider retail loss prevention to be a priority. Loss prevention can be defined as a set of best practices that a retailer should follow to prevent product and profit loss.
In order to better understand how to prevent product loss, you must understand what causes it and how those losses occur.
As outlined above, the number one cause of inventory shrinkage is shoplifting. Shoplifting can take many forms, whether it’s an individual acting alone and stealing one or two items or it’s a serious case of organized retail crime where thousands of dollars worth of merchandise is stolen.
Whatever the case may be, it’s important to take necessary precautions so you can lessen the chances of shoplifting taking place in your retail store.
The following are some merchandising best practices that can help deter physical theft:
Merchandising best practices
a) Use effective signage: Make it clear to potential thieves that your store is being monitored. Hang signs around your store warning shoppers that they are under surveillance. Or alternatively, you can use signage to remind them of the consequences of committing theft.
b) Cameras: It’s good practice to place cameras by POS terminals, the entrance/exit to your store, and by any loading/delivery areas. To beef up your security even more, you can also consider hiring security staff.
c) Mirrors: Smaller retailers may not have the resources to install cameras in every corner of their store or have their employees constantly monitor the aisles. For theses retailers, mirrors are a cost effective option to make a significant impact when it comes to loss prevention. Placing mirrors in key areas and corners of your retail space will allow one or two employees to easily monitor the whole store. It also helps your store look more spacious.
d) Revise your store layout: Thieves are less likely to act when they are in plain sight of store employees. This is why it’s a good idea to organize your store layout so that employees have maximum visibility – avoid tall shelves and clustering product displays together. Also, consider placing valuable merchandise closer to staff or in locked displays.
e) Keep your store organized: An organized store is key to deterring theft as well as encouraging shoppers to buy. Keeping your store organized will also make it easier for staff to identify missing product. On the other hand, a disorganized store makes it easier for thieves to operate and can even play a part in attracting them.
2) Use RFID technology
A radio frequency identification system (RFID) is an advanced technology system used by larger retailers to improve inventory management and protect against shrinkage. It is particularly effective against internal theft and administrative errors as RFID tags are harder to manipulate.
RFID chips contain inventory information and are embedded in product tags or packages. This then lets store owners track product information in real-time. They are especially useful for retailers who are omnichannel as RFID provides item level visibility so you can track merchandise from distribution to sale.
While RFID technology has traditionally been too expensive for small retailers, the cost continues to fall as more and more retailers are using them. In some cases, the cost has fallen below $0.05 per tag. While this may still be too high (especially when you add the labor cost of applying tags), depending on your volume (which may allow you to request your supplier to apply them) or the value of your products, it may still be more cost-effective than any losses you would incur as a result of shoplifting.
Many POS systems give retailers the ability to create different staff accounts and set user permissions. These permissions allow store owners and managers to restrict staff members from accessing certain features in the POS system. Put simply, user permissions are ways for business owners to limit employees from performing tasks outside of their job description and to prevent internal theft.
Depending on the size of your business, you will want to be able to customize the type of rights different employees have access to. If you have a lot of staff or have turnover due to seasonality, you’ll want to look for POS systems that allow you to easily group employees by different customizable roles. In this way, you can easily set the access rights for a role (e.g. cashier) and then simply assign any employee to this role without having to manually set up the rights for each person.
4) Manage refunds and returns
Fraudulent returns (returning used, stolen, exchanged merchandise or returning merchandise with counterfeit receipts/money) happen frequently in retail. And while return fraud is harder to assess than shoplifting, a strict return policy can help prevent it from occurring in the first place.
Here are a few tips for developing a practical return and exchange policy that minimizes the risk of internal and external theft:
Require the original receipt for all returns and make sure the store’s return policy is printed clearly on all receipts. Most POS systems will allow you to customize receipts to include important important information such as store policy, contact info, and social media.
Make sure employees are strict about enforcing the store return policy. Consider placing a written version close to your checkout tills. It’s also a good idea to have employees remind shoppers of the policy at checkout.
Require customer ID to process refunds and exchanges and train staff to spot fraudulent returns.
Consider offering refunds only in the payment method used to make the purchase. While there is a processing cost to allowing refunds on credit cards, it is a lot easier for savvy users to process fake returns if it is possible for them to refund using cash. After all, it’s as simple as reprinting a receipt, processing a return and pocketing the cash themselves.
Look for a POS system that gives you the option to accept returns with a separate return screen that forces users to associate a refund to past invoices.
We hope you found this article helpful.
If you are a Toronto retailer, you can download the following whitepaper for emergency situations.
As a retailer, you’re bound to experience high and low seasons.
Periods of slower sales can happen for many reasons such as natural seasonality (e.g. Halloween supplies), the weather, or competitive promotions. Whatever the reason for your slump, it’s important to view your off-season or slow periods as a potential opportunity.
Low seasons are actually the perfect time for retailers to focus on their marketing efforts. With a little bit of creativity and planning, you can make it through your off-season with not only more new customers, but a larger base of followers to promote to. And who knows, you may even find a new revenue opportunity in the process!
Keep reading for 3 strategies that you can use to keep your retail business profitable during your slow periods.
Why an off-season marketing strategy is important
There is a common misconception that businesses should only invest in marketing during their high season. But this isn’t the case. Your slower seasons are actually the time when you need the sales lift from marketing!
In particular, an off-season marketing strategy is key to:
Building local and online awareness: Knowing is half the battle. Shoppers don’t know what they’ve never seen. Marketing during the off-season gives your retail business time to build online presence and brand awareness with target shoppers. You can educate customers on what your store has to offer and how you are better than your competition. This way, once your peak season hits, you will be top-of-mind with shoppers.
Minimizing your overall marketing costs: Ad spend decreases during the off-season as less competitors are bidding on ad space. This means that you can get more exposure at a lower cost versus advertising during your high season.
Getting ahead of your competitors: Besides getting new shoppers in your door, marketing during the off-season also gives you the opportunity to start building your own mailing lists or followers. This is particularly important as you need time to attract a following of people interested in what you offer. But by starting earlier than your competitors, you will be ahead of them by having a new list of potential shoppers that you can market directly to during your high season.
3 marketing strategies for the off-season
When we’re talking about marketing, we are specifically talking about digital marketing. While traditional marketing has its place, for most privately owned businesses, digital marketing offers the easiest way to promote your business, especially during your off-season. After all, today’s average shopper now spends more time with digital content than traditional media.
With so many people basing their purchasing decisions on reviews, gathering reviews should be a key marketing strategy for your business all year round. But the off-season is usually the best time to ask loyal and long term shoppers to leave a review on your Google My Business (GMB) profile, especially now that you can create a GMB shortname unique to your business. You can then use customer reviews as promotional material across all of your digital platforms including your social media and store website. By staying active online and promoting positive customer testimonials, shoppers will remember your retail business when peak season hits.
2) Consider paid marketing options
Digital marketing benefits retailers of all sizes as it is always the fastest way to cost-effectively access an incredibly targeted audience of shoppers. The advantages of digital marketing include:
Fast impact: Compared to traditional marketing, paid digital marketing will make an impact much faster. Depending on the type of campaign, you can get up and running in minutes.
Flexible and accountable: The results of digital marketing are much easier to see so you can immediately know whether a campaign is working and make changes right away. This is a major difference from traditional marketing where your investment is a one-time deal since you can’t make changes once a flyer or a radio ad is printed or produced.
Lower overall cost: A well planned out digital marketing campaign can reach a targeted audience at a much lower cost (as little as $10/day) than traditional marketing methods.
Click here to learn more about the benefits of digital marketing for retailers.
Sephora, Canadian Tire, and Williams-Sonoma are some of the big box retailers who have seen success with Google LIA. Now for the first time ever, Local Inventory Ads are also available to independent retailers who are looking to attract local shoppers. And the best part? They are available in an automated way that doesn’t require retailers to hire new staff or keep inventory stock levels updated.
To learn how you can easily implement Google LIA together with your POS system, click here.
While Google LIA has proven to be a viable marketing strategy all year round, it is particularly effective during off-season for the following reasons:
Bids are lower: As mentioned above, there are fewer competitors buying ads during off-season – which means lower ad spend is required to gain impressions.
Marketing costs are minimized: LIA only showcases in-stock product and will automatically turn off when stock runs out, reducing your marketing costs.
Get in front of local shoppers who are actually looking to purchase your products: Google LIA displays in-stock product to shoppers within a certain Km radius (you have full control over the geographical range) who are actually searching for products that your store sells.
3) Promote your business on social media
With the rise in social media and e-commerce, shoppers are closer than ever to retail businesses. Not only do you have a way to directly showcase your products and store, you can now build up your list of followers for personalized offers.
While websites are still a great way to offer a “digital window” into your store, with the rise in social commerce (e.g. Facebook Shops, Instagram Shopping, etc.), it’s very important for retail stores to be active on social media.
Check out these 6 tips to help you grow your social following more quickly during your low season:
Make sure you have a verified Google My Business (GMB) account and are active on it. GMB is one of the best free online marketing tools available for small businesses today. Not only does GMB help local shoppers find you on Google Maps, it has options for you to post content (e.g. special offers or events) which improves your SEO.
Improve your content design with cost-effective graphic tools. You don’t need to be a designer to use drag-and-drop tools such as Canva that even have free versions.
Use original images for the best results as these rank better on SEO.
Don’t forget to include the links to your social media accounts on email signatures, invoices, receipts, ads and on any window displays.
Clearly display your social media links at the cash register and train your staff to encourage shoppers to sign up for special offers while they are waiting.
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Going from a single retail store to a multi-location operation comes with different business challenges and growing pains. But, at the same time, it also comes with greater opportunities to reach more shoppers and grow your sales.
In fact, with the right technology and processes in place, managing several retail stores is a great way to start leveraging the benefits of scale. There are many ways to manage multi-store retail operations effectively to make sure that your transition happen smoothly.
Tips for managing multi-store operations
1) Run your retail operations in the cloud
Managing multiple retail stores at the same time requires more efficiency and flexibility in running your business. In particular, it requires a retail POS system designed for multi-store management. This is where new cloud POS technology comes in.
Because cloud software isn’t tied to a specific device, as long as you have an internet connection, you can access your POS and the data you need to run your business from anywhere. Whether you’re in store, on the go, at home, or even on vacation, checking in on your stores is as easy as logging in to your POS system from an internet browser.
Cloud retail POS technology also gives you access to centralized, real-time data across all of your retail locations. So important information such as stock levels, sales history, and customer information are always up-to-date. After all, in today’s competitive retail environment, shoppers expect stores to be able to access real-time stock levels across all locations.
Accurate data leads to less stock-outs and lost sales and ultimately, happier employees and customers.
2) Minimize staff turnover risks and simplify employee training with technology
You obviously can’t manage multiple store locations by yourself. So, it’s important to hire competent staff members that you can trust to take charge of different store operations while you are away.
But even if you hire the right people, the fact is, how you manage staff is just as important as who you hire. This is especially true once you have multiple locations.
It’s important for you to be able to trust your managers (and a great manager can make all the difference in a store’s performance), but unless your staff are tied to your business, there is always a chance that an employee will quit. And you need to be prepared for that day.
There are so many examples of companies that have over-relied on one or a few individuals that there is even a term for this: “Key-Person Dependency Risk“. This is a particularly big issue for small-to-medium businesses that often don’t have the resources for back-up personnel or even cross-training of staff.
This is where technology has been able to add real value in terms of minimizing the risk of over-reliance while, at the same time, freeing up staff from doing boring, routine tasks.
A well-managed company is never dependent upon the performance of one or a few individuals. As well, no employee should be allowed to hoard knowledge, relationships, or resources to achieve job security.
This is why it is crucial to consider the built-in security controls and training tools already in place when choosing a retail POS system. Almost everything in a modern retail business flows through a retail point-of-sale system. As such, your ability to manage the knowledge (e.g. reports, costing, margins, etc.) in your business greatly depends on:
Your ability to track the actions and performance of your staff with your retail POS.
Your ability to easily train new staff in different roles whenever there is turnover.
If you’ve worked in retail long enough to expand to multiple locations, you know the importance of POS and how costly it can be to manage and train staff to use a new point-of-sale system.
For retailers who deal with peak periods, long lineups, or high employee turnover rates, it is essential for merchants to consider the real cost of both onboarding and training over time. Because unless you never expect to lose any staff, you will always be re-training some employees.
While you may be tempted to choose the cheapest POS software option or the one with the simplest design, we always ask our customers to take a good look at the type of security and access controls they will have right from the beginning. It is very difficult to control the data of a retail business outside of the POS system and too costly (assuming it is even possible) to get custom features added to a standard system used by many other merchants.
It’s why we put so much time into the design of the access rights and training tools within our own POS. After all, while we design our software for user-friendliness, clean design cannot be simple to the point where it lacks real functionality. And in modern cloud-based POS, it’s possible for even feature-rich systems to be easy-to-use with properly designed UX and practical tools such as built-in product tutorials.
3) Implement standard operating procedures across all of your retail locations
Standard operating procedures (SOPs) ensure that business operations are consistent and predictable across all of your retail locations. Put simply, SOPs make managing a multi-store business easier – and they give your customers a consistent shopping experience.
Standard procedures that should be established at each store include product returns and discounts, order policies, store, and security. Similar to access rights, the easiest and most common place to manage SOPs is through your POS system. So make sure to check if the POS system you’re considering has options to manage returns, discounts, cashouts, sales policies, etc.
4) Choose a retail POS that can scale with you
Many retailers make the mistake of investing in a new POS without thinking about business growth. There are many retail POS providers that restrict the number of users, inventory items or stores that can be added. Meaning that once your retail operations grow beyond a certain level, you must invest a considerable amount of money to upgrade your POS plan or switch to a new POS altogether.