Do you know what your shrinkage is?

Why is this important? Firstly, let's start by talking about what shrinkage is, because it's not just customer theft.

In its most simplified form, shrinkage is the difference between what you should have and what you do have. Whilst customer theft is a big part of that, and certainly the most high profile, so is staff theft (yes, it happens), short supplied stock, goods sold incorrectly, goods priced incorrectly, goods not received into stock correctly and so on. In fact, it's not uncommon for the largest part of your business's shrinkage to be down to internal rather than external factors. 

Which brings us to the importance of knowing what your shrinkage is: without measuring it, you can't constructively manage it.

Any business which relies on the movement of physical stock will experience shrinkage to some degree. However, without regular comprehensive stocktakes, it is very difficult to measure the extent of that shrinkage. Financial, or computer generated, stocktakes are useful in telling you what you should have, but without comparing that to a physical check, your shrinkage remains unknown.

I'm a great advocate of the annual stocktake; bringing in extra staff, shutting the store and checking everything - EVERYTHING - in one session. As much as this requires a great deal of planning and effort, as well as the cost of extra staff (how many staff is down to how quickly you want it done), it's outweighed by the benefits to your business:

• Having a clean database;
• Accurately measuring shrinkage;
• The ability to produce a report of all discrepancies;
• Being able to assess areas of particular risk;
• Discovering those items which should be gaining repeat sales but which have dropped off the system through loss;
• Calculating an accurate, rather than an estimated, cost price for stock.

Whether the cause is theft related or a matter of human error, it is within your control to minimise the extent of your loss. Unusual occurrences or patterns may be an indication of a larger issue.

Which department are being targeted?

You'll almost certainly find that some product is more prone to theft than others, and the results may surprise you. If this is the case, you may need to move sections around or reconsider your display options. In some cases, if the theft issue is particularly challenging, you may need to consider whether you stock the product or range at all.

Are certain areas of your store particularly prone to theft?

It may be that the location rather than the product is the problem. This is something you may notice as a pattern having done several stocktakes. If so, consider new lighting, redesigning the layout, or perhaps even removing and replacing units.

Does your discrepancy report show odd margins or quantities?

Your problem may be in the back office in goods receiving or data entry. It may extend to the accuracy of sales being put through the register or the way customer orders or laybys are handled.

The preparation for a stocktake can also highlight potential problems: are completed customer orders still showing as outstanding; are laybys being cleared promptly; stock accumulating in non-sale areas, such as behind shelving, in back rooms, under counters etc.

Look at a stocktake as an opportunity to gain an accurate snapshot of what's happening in your business, and you'll find numerous ways to improve both the efficiency and effectiveness of how you operate. There are so many benefits to running regular stocktakes that you'll wonder why it took you so long to start.

Don't sabotage your message

You want to convey a message to your customers, so you formulate a sign, have it made up and display it. What response are you hoping for? Chances are you're expecting an increase in footfall, wanting to raise your profile and be front of mind for potential customers or looking to reinforce your place as part of the local community. Perhaps all of these things. 
Unfortunately, too often good intentions are let down by poor execution and lack of care.

This got my attention for all the wrong reasons.

I came across this sign the other day. It got my attention, but left me shaking my head. The idea was a good one, and the window is in a great location, but many people will be walking away wondering about the professionalism of an outfit which can't get a simple sign right.

Pedantry? Perhaps. However, customers make shopping decisions for a myriad of reasons, some of them emotional and instinctive. If they're making a split second judgement of your store, make sure you're putting your best foot forward.

Whilst the example above is striking, there are other, less obvious, ways retailers drop the ball in how they present their message:

• Signs which are out of date, in poor condition or containing spelling errors;
• Handwritten signs (and not the creative, engaging kind);
• Sticky tape, fishing line, staples etc not cleanly removed;
• Too many messages;
• Not reinforcing what's stated externally, internally (if it's in the window, display it front of store, or at least make it easy to find).

The examples on this list aren't exhaustive, but they are commonly found. Unless you can say for certain none of this is going on in your store, then it's worth doing a walk through and checking for them. When you spend day after day in your store, it's easy to develop "store blindness", not noticing what's obvious to others. 

With so much competition for a customer's attention - and dollars - you can't afford to be ordinary. You certainly can't afford to look unprofessional. When you work hard to attract new customers and convince existing ones to return, it's a shame to undermine that effort with carelessness elsewhere.

Have you seen examples of good signs gone bad? Perhaps you have your own horror story. Don't be bashful, share the love.