Building a Retail Theft Prevention Plan

What is Retail Shrinkage?

Shrinkage is the overall loss of merchandise. So anything that is damaged during shipping, stolen, a cashier error, and vendor fraud is included in shrinkage.

1. Employee Theft
2. Shoplifting
3. Administrative Error
4. Vendor Fraud

Implementing a system to prevent overall shrinkage is a much larger process and may be an article for another day. Today, we will be primarily covering retail theft, which includes shoplifting. But before taking action, you must consider the possibility that customers may not be the only people stealing products. Your employees could be the actual culprits. Now, I know your thinking “How dare you?!” or “Not my employees!”, but there is a good chance it could be true. According to the National Retail Security Survey, employee theft was estimated to be responsible for 33.2% of store inventory shrinkage. The latest statistics, published in 2018, showed shrinkage totaling $46.8 Billion nationwide. Even if an employee just takes a few things here and there, it could easily add up to thousands of dollars in stolen income from the company. In many cases, this could make or break a company’s bottom line. Even if you trust your employees, it would be wise to run a background check on each existing and future employee, including managers. By the end of this article and with the proper tools, you will be able to determine who is shoplifting and how to bring it to a halt.

Employee theft was estimated to be responsible for 33.2% of store inventory shrinkage.

A Core Storefront Layout & Surveillance

Just like the title tells you, the proper floor plan will be the core of your storefront theft prevention strategy. Layout has everything to do with visibility, so you want to make sure that from the register(s), you and your employees are able to see every part of the store. Don’t stress if there are a few blind spots. That is what store security personel, employees, and cameras are for.

When working with a store layout, you’ll also want to make sure that the most expensive merchandise is towards the back of the store and near the register. It can be smart to place small items near the register, but no so much that it blocks your view of catching a shoplifter in the act. Essentially, you want potential shoplifters to know they can always be seen. That why it is also important to have a security camera system in place. Whether its digital or analog, being able to look back on the footage and have proof of wrongdoing for the authorities is important. If you can’t afford a surveillance system or just want to save up a few more dollars for a higher end system, fake cameras with LED lights can look real enough to make a store shoplifter to think twice. An electronic article surveillance system, or EAS, is another must-have for any retail store. Using security tags along with EAS gates will not only deter people from stealing but will also come in handy if clothing is accidently taken from the store by young children.

Approximately 25% of shoplifters are kids, 75% are adults. 55% of adult shoplifters say they started shoplifting in their teens.

Another inexpensive way to reduce theft is by using ink clips. These clips might not sound an alarm when being taken out of the store but if shoplifters try removing the clips, ink will spray all over the article of clothing and the person’s hands. This will make it so you can literally catch them red-handed.

Computerized Inventory Tracking System

With today’s increase in technology and competitive pricing, it is now cheaper than ever to implement a point-of-sale system for taking inventory of products, recording sales, and viewing product shrinkage. There are many reasons why you should already have an inventory tracking system. The savings in overhead costs using such programs will make you think, "Why haven’t I looked into this earlier?" These systems will record information to easily see what is placing you in the red. The precise calculation with an inventory system or POS system will minimize human errors and make reporting quick and simple. Overall, this is an essential part of recording theft and shoplifting.

Locking Safes & Reviewing Merchandise

Another common security measure used to protect merchandise is to place items in a locking safe or display case. But remember, a safe is only as good as the people who have the keys. So if you give a copy to someone when you are out of the store, make sure you have 100% trust in the person. There have been cases where a dishonest store manager has someone “hold up” the business while he is the only one there, only to split the money with the “robber” later on.

Another security precaution you can take is to double-check customers’ purchases. People can easily switch clothing tags out with cheaper merchandise tags, tricking the clerk. Your store representatives should also check to make sure a product has not been stuffed inside another one. By not checking, you could potentially be letting merchandise walk out the door. Many companies even station a clerk or "greeter" near the door who manually checks the receipts of every customer before they leave. Checking receipts may aggravate some customers, so storeowners should weigh the advantages against the disadvantages before implementing such a strategy.

As you can see, there are many ways to deter and minimize shoplifting from customers and employees. Using today’s technology, a security system can be implemented for a smaller price tag than you might think. Here are some great tech tools to help stop shoplifting in its tracks.

Smart Tagging - Radio frequency ID, smart chips can track what was stolen and from where in the store

Entry Sensors - detects items in aluminum-lined "booster" bags

Source Tagging - 2” tag sewn directly but unobtrusively into fabric

Apple Accelerometer System - Apple’s motion sensor built into iphones to determine if a theft condition is present.

Popular Shoplifting Tricks

Here are some tricks and secrets that shoplifters use to remove merchandise from your storefront everyday. Use these tips to easily find who is stealing from you!

Hiding the Merchandise

Stolen goods are frequently hidden in baggy clothes, like big coats, long skirts, and dresses. Other items, such as baby carriages, closed umbrellas, large bags, and newspapers are also prime areas for hiding small objects.

Favorite Tricks

Putting clothes on underneath existing clothing while in a dressing room and walking right out of the store with it is one of the most popular techniques for theives. Other more brazen shoplifters simply walk in the store, grab a pile of clothes off the first table closest to the door, put it in a large bag, and walk out before anyone has time to react.

Summary

• Make sure you can see everywhere in the store
• Use computerized inventory tracking systems
• Use security devices (dye tags, RF tags, electronic gates, alarms)
• Use a camera system even if its only a dummy camera
• Keep cheaper items in the front of the store and expensive merchandise in the back
• Pay attention to your own employees (they could be the culprits)
• Get a safe or locking display case for high dollar items
• Shoplifters are very crafty, so stay informed about their latest tricks

Sources

Shop Lifting Techniques

U.S. Retail Worker Theft

Shop Lifting Statistics