With an increase in stock losses by 22.2% and cost of over £5bn in lost sales to retailers, we have decided to provide you with a list of the top 10 ways to reduce stock losses in your business.
According to RetailFraud.com’s 2014 Retail Fraud Survey, increased stock losses for UK retailers across the sectors vary from 0.6% (mainly hospitality and leisure sectors) to 2.4% (department stores).
The two main reasons for stock losses are
• Shoplifting 39%
• Internal theft from employees 33%
Remainder is a combination between
• Admin book-keeping errors
• Cash internal
• Stock supplier fraud
• Cash external
So what are retailers to do in order to decrease shrinkage?
(Shrinkage is a term that we give to all stock that is unaccounted for ie: not sold)
Retailers, wholesalers, pharmacies, publicans, all make their money from their stock, so it is important that they have control and measures in place so as to manage it effectively.
So how is it done?
Here are the top 10 ways to reduce stock losses in your business.
1. Have a good working knowledge of how to use your Point of Sale (POS) effectively. Many businesses have expensive, state of the art electronic management tools at their disposal but use their POS as a cash box rather than a tool that can manage their stock more effectively. Use it to manage your stock
2. Have a live stock system in place. time spent on having a system in place so as you can see the movement of each stock item at the click of a button and to manage it through the system from back door to front will ensure that stock is managed in the best possible way. It will show staff and suppliers that discrepancies will be identified
3. Know what stock you have on hand – now. It’s your stock and it is how you make money so have a plan so as to have it counted several times per year
4. Know the level of shrinkage that is occurring within your business. Thinking that you have a problem is not good enough
5.Identify what products are causing you problems. And put in place a plan to reduce the shrinkage of them. This is done through either stocktaking (preferred method so as to identify the exact problem item) or a departmental analysis of scanning margin versus actual margin (but this is not as accurate and will not identify the problem items)
6. Take time to investigate discrepancies. Often we see owners undertaking cycle counting but then don’t take the time or allocate the resources to analysing the variances. This is where the real money is.
7. Undertake cycle counting. These are mini stocktakes and are usually of a particular department which is either high value of prone to high levels of stock loss. Undertake this on a regular basis until the issue is solved
8.Communicate any issues that arise with your team, at all levels. Explain what is being done to tackle shrinkage. as the above statistics show, over 30% of stock losses are internal theft from employees
9.Train your staff.It is important that your staff are trained in both how to work your POS and also how to manage your stock (including the ordering, receiving, storing, displaying and selling all stock items).
10.It is everyone’s responsibility.A common mistake is to place only the best, the most diligent person in charge of managing the stock. A good idea in principle but what do you do when they are off, on holidays, on a break, out sick or leave to work elsewhere? Yes, have one responsible person who is in charge, but also share the knowledge to others so as they are aware of a company attitude, that “stock losses will be identified”
If you have any questions on any of the above, please contact Patrick McDermott on +353 (0)91 762001
Source of statistical data is from http://www.retailfraud.com/shrink-up-22-2-says-retail-fraud-survey-2014/