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.

Good customer service is also good security

Do you know what your store's shrinkage level is? If the answer is No, you're not alone. Which is a pity, because not only does shrinkage have a direct impact on the viability of a business, but it can also be managed through staff behaviour. 

Knowing the extent of the problem (if you're in retail, you're going to have theft - it's just a question of degree) and the areas most affected allows you to adapt and make changes to minimise your loss. 

If you don't have the numbers or breakdown, don't worry, there are basic things you can do that not only make your business less attractive to thieves, but also more attractive to customers. 

What to look out for

You can't spot a potential thief by the way they dress or behave. People steal for all sorts of reasons and all sorts of people steal. There are, however, certain types of behaviour which should raise a flag:

• Nervousness;
• Loitering or monitoring surrounds. If they're less interested in your product than in the layout of your store or what your staff are doing, they may not be there to shop;
• One member of a group of people keeping you occupied and unable to monitor the others;
• Wearing unseasonal clothing, such as coats or heavy jackets in warm weather, or carrying them in cold weather (useful for hiding your stock);
• Placing personal items on top of merchandise in a way which obscures it.

You should also look out for:

• Large bags, backpacks, prams etc, which can be used to conceal merchandise;
• Piles of stock where they don't belong;
• Price stickers or security tags beneath or behind shelves

It's worth mentioning that whilst someone may display one or more of these behaviours, it doesn't mean they will try to steal from you. They may be acting oddly because...well...they're odd. It happens. Use this information as a tool, the way you would any other.

What you can do about it

If you're beginning to feel a little overwhelmed and vulnerable, know that there are some simple things you can do to make your business less attractive to thieves. 

• Greet everyone who enters your store. Thieves like to remain anonymous and prefer not to run the risk of being recognised;
• Be unpredictable. Thieves love predictability, so counter bound staff are a gift. Get out from behind the counter, walk the floor, take different paths (if possible) when travelling between counter/office/backroom/toilet etc;
• Keep fields of vision as clear as possible. Tall shelving and display stands can act as cover for thieves;
• Dark corners and poor lighting are also a shoplifter's friend. Keep your store appropriately lit and have good visibility in all areas;
• Keep non sales areas secure by having locks and/or alarms on doors - and using them! Thieves will take advantage of any opportunity, which includes nipping into the back room and rifling through drawers and personal possessions;
• Good housekeeping and tidy shelves make it easier to spot merchandise which has been moved;
• Keep expensive or targeted items near the counter where they can best be monitored. Alternatively, consider a lockable cabinet;
• Make it easy to summon assistance by having a bell or some other form of alert at the counter;
• Farewell people as they leave your store. For some opportunist thieves, this simple act is a strong deterrent.

As you can see, there's little here which isn't also about customer service, whether it's acknowledging the customer, creating a welcoming environment or being on the shop floor where they're most likely to need assistance, rather than behind the counter. 

Best of all, it will cost you nothing.

So, if you think addressing store theft is too hard, think again. Some of the easiest - and most effective - steps you can take not only cost you nothing to implement, but are also good for sales. What's not to like about that?

And remember, good customer service is also good security.