How To Reduce Shrinkage In Your Retail Store 13Apr

How To Reduce Shrinkage In Your Retail Store

Step By Step Process To Fix Retail Shrinkage

According to a survey shrink or loss of stock related to theft, shoplifting, error, or fraud, is decreasing the bottom line by £50.6 billion across the business. The complete report found that whether the loss is happening from a single employee or organised retail criminals. The shrinkage costs about 1.38% of sales, on average.

It is important to know these issues and implement a strategy to reduce their impact.


The biggest problem faced by brick and mortar stores is the 5 fingers discount. Shoplifting accounts more than £13 billion pounds damage to UK retailers and just 1 of every 48 are caught, with just 50% of these being gone over to the police.

Concealment is the most used method for robbery among shoplifters, so smaller things are especially vulnerable. Other methods include picking multiple products to the changing room, distracting staff or using the private space to conceal goods. Swapping price tags and seeking fake refunds are also popular shoplifting techniques. So let’s look out a few ways to combat these theft methods.

Fit Out Security Cameras

Installing security cameras in your store can serve dual purpose. Initially, installing cameras is a proven way for reducing the pace of theft as it acts as a deterrent. But, it also allows you to watch out for your store whether you`re available or not.

Adhere to a Strict Returns and Discounts policy

Theft through fraudlent discounts and returns is a common shoplifting strategy and one of the primary reasons is that it`s difficult to pinpoint. This is the place you have to ensure your return and refund policy is clear and your staff need to implement it. If your policy states that customers won`t get a refund without a valid receipt, ensure this process is followed exactly.

Store Organization

If your store is efficient, it`s easy to spot if something`s missing. A chaotic messy store can turn into an easy target to oppotunists. In case you`re putting effort into your visual merchandising, this shouldn`t be an issue.

Position Your Registers Insightfully

Having your staff stationed at cash registers near exit points will help with catching shoplifters and reduce the risk of cash register theft.

To avoid the opportunity of shoplifters grabbing cash too, it`s best to have the till screen locked after each transaction and just got to by employee codes. With Epos Direct you can either have your till sign out after every transaction, or after a time of inactivity, similar to 30 second, 1 moment or 2 minutes.

Enployee Theft

Employee theft is one of the most important issues facing small businesses. According to a study, employees represent a whopping 44% of theft losses at stores.

The difficulty is, staff theft isn`t something retailers think they need to stress over. However, they should be worried as this sort of theft can take many forms.

  • - Outright stock theft
  • - Skimming - like ringing up counterfeit accounts or skimming directly from the cash drawer
  • - "Sweethearting" - where the staff gives away merchandise to a friend, relative or different employee
  • - Tampering with checks and expense reports

So what are the best ways to stop staff theft in your store?

Introduce a staff screening process

Prevention is better than cure. Try to weed out potential staff who are more likely to take from your business by implementing some kind of screening process during recruitment.


When you have a team in place, you have to ensure that all members are sufficiently trained. That way you further minimise the opportunity of loss occurring through mistakes and even losses related with shoplifting.

Carry Out Audits

While monitoring your staff can help, showing that you`re on top of what`s going on in your business is probably the best hindrance. Implement practices like random cash considers as a deterrent to skimming.

Make Staff Feel Valued

Build good relations with the team by showing genuine interest in their circumstances and offering advantages as a way to say thank you. This will make a better work environment and increase the general vibe and culture.

Administration Errors

Administrative errors are the third most regular reason for product loss. These can include anything from accounting errors, to poor stock administration. Errors in paper work frequently referred to as `paper shrink` are mostly an unexpected result of a regulatory error.

These kind of errors despite everything represent in excess of 20% of retail loss. That compares to a large portion that can be restricted if the right systems and processes are implemented.

A few processes that can be implemented to reduce paper shrink include:

Full Employee Administrative Training

The initial step to limit admin errors is to guarantee that staff are trained in the right practices for all perspectives they are associated with. Whether they`re pricing up new stock, getting orders, or processing a discount, staff that are trained appropriately are less likely to commit the mistakes that end up causing some retail losses.

Stock Management

The core piller of any retail business is having a comprehensive epos system and stock management system. Combining these two systems will help you track stock and transactions as they happen, avoiding errors and identifying potential and theft.

Poor record keeping and stock administration cause shrinkage. A strong practice of stock taking your inventory can extraordinarily decrease shrinkage. Many mistakes can be uncovered with this practice before the stock is sold and becomes shrinkage.