Retail loss prevention has been considered one of the main aspects in recent times that require the attention of concerned authorities so that offices can be protected. As one of the major enterprise functions, the term ‘retail loss prevention’ means that retailers of all segments can save their big business accordingly. According to the Global Retail Theft Barometer, inventory shrinkage leads to around $42 billion on an annual basis for the retailers of the United States. Besides this, it amounts to almost 1.5% of the sale.
Shrinking margins and increased competitive pressures are faced by retailers, along with the emerging limited partnership (LP) threats from the cyber-fraud and organized retail crime. In the recent retail loss, professionals of loss prevention are considered more accountable for the opportunity to impact the business positively. In the meantime, they must do face the increasingly tight resources’ constraints.
Identifying Grounds for Shrinkage & Deploying Countermeasures
Before a retailer could deal with shrinkage and combat it, it should first consider the main causes and then prioritize about return on the investment. The primary cause of shrinkage is the theft, both from non-employees and employees alike. On the other hand, other reasons include ineffective inventory management, pricing mistakes, accounting and process errors, supplier and vendor fraud. In the United States, theft is considered by far the major cause of retail loss and shrinkage. With the greatest loss single source being theft from the dishonest employees, that accounted for more than $18 billion in retail losses or overall 42.9 percent of total retail losses.
On the other hand, with the shrinkage, the retailers are quite differently affected, and a business needs to determine and audit the most significant needs carefully. For example, bookkeeping errors and theft are considered some of the huge opportunities for improvement with both department stores and discounters. However, the attention of discounters must be internal, while the department stores will serve appropriately to focus externally.
On the contrary, the home improvement stores are considered as having more for gaining from the non-crime retail losses and other curing administrative losses other than theft. Certainly, execution is not considered as simple as it seems. The three steps to reducing retail shrinkage for minimizing the loss prevention risk include training staff, integration of the inventory management systems, and activation of the loss prevention modules on platforms of retail analytics.
Training Staff
An appropriate and effective trained staff could return the immediate dividends, besides the much retail loss exposure in relation to the human element. Firstly, the importance of training employees and eliminating theft should be communicated on not only how to respond in the best possible manner, but also how to predict the threats of shoplifting. Secondly, policies, processes, and practices must be installed that enable the employees to know the fact that they are kept under scrutiny. Lastly, fully discipline/prosecute and investigate all the cases, developing the ongoing operations a new normal aspect to deal with the business.
Integration of Inventory Management Systems
A specific combination of software and hardware that allows a retailer to track the deliveries, orders, and inventory levels in an accurate manner when tied to sales of POS systems is known as the Inventory Management System. Besides this, the integration of this system would help in the efforts of preventing the loss. It would also develop an efficient process of the supply chain, freeing up the old working capital, and lowering costs of inventory carrying.
Activation of loss Prevention Modules
A retail loss prevention model’s activation would help the business to expand the abilities to find solutions. Moreover, it would assist in replacing the limited partnership, single-point solutions, and reduce both the operational and capital expenses, which lead to an increased ROI. Also, the limited partnership innovative modules include the POS exception reporting, advanced video management, in-store dwells around the high value or high-risk merchandise, and monitoring of the security event. The experts of a limited partnership are allowed to act efficiently and quickly according to the built-in platform, removing the need for the purchase of costly data and time consuming along with the case investigation.
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