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shoplifting

POS SOFTWARE

This COVID pandemic has proven to be a boom for shoplifters. The current big problem is that it's harder to identify shoplifters as they tend to wear a mask.

Once they have the mask, a CCTV camera often can no longer be used to identify people to the authorities. Nor can camera photos in front of the shop or Facebook posts shame people.

Note: A retailer can ask a person to remove your face mask to confirm their identity. Yet, the person does not have to do it.

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Overseas reports are reporting that shoplifting as a result of COVID has skyrocketed. Although no figures have come forward for Australia now, as we tend to get these only after the stocktakes in the mid-year. It is almost certainly true now in Australia too.

Unfortunately, it does not take much to turn a slight increase in shoplifting into a crisis. Depending on your margins, a 1.4% stock shrinkage could amount to a 20% loss in profits.

Much of the problem now, I am sure, is because most shops are desperately keeping staff to a minimum to hold off cost pressures that are forcing prices up in an attempt to combat surging inflation and supply chain disruptions.

Consider a check of some of your shop to give you a feel of how you are affected. This is easy to do; follow the documentation on stocktaking in your point of sale software. Fortunately, we did increase the flexibility of the stocktaking procedures last year, so making it easier. What you do is divide some parts of your shop into several small areas. The size of the area is that one person can do in two hours. Keeping the locations to manageable size means it can be stopped and started as the shop trading conditions change.

This will give an exact figure in your discrepancy reports. These are invaluable for examining your shoplifting problem.

This will enable you to make informed business decisions.

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Now you have done your stocktake.

It is a simple calculation for you or your accountant to do to determine your stock shrinkage. 


(stock shrinkage)= (opening stock) - (closing stock)+(purchases) -(Total sales at cost price) 

Generally what we do now calculate it as a percentage of sales, so it becomes = (stock shrinkage)/(Total sales) x 100% 

Although often people use, shrinkage by stock value which we do in two steps.

(Average stock holding) =((opening stock) - (closing stock))/2 

(shrinkage by stock value)= (stock shrinkage)/(Average stock holding) x 100% 

So now you know your stock shrinkage, so you have an idea of how big a problem you do have. 

As a punt, I would say that it will be about 1.4%, but it does vary a lot.

One client of ours reported that it was less than 0.1%, which is the best figure I have ever seen. I have also seen a shop which a receiver told me it was 6%, which is no wonder a receiver was there. 

I do suggest that you do these calculations because if you do not know it, what can you do to fix it? Some significant reasons would be.

1) Customer theft - The five-finger discount

2) Damage - We had one furniture shop that was recording huge numbers of damaged goods somewhere between receiving and customer delivery.

Goods that suffer a significant damage problem should be moved to a safer place. I know a shop that after calculating their damage rate stopped handling glass products.

3) Supplier fraud - Which is all too often, although many suppliers claim they are accidents, I am not so sure. The result though is that a supplier bills you for goods shipped, but for some reason, you did not get.

4) Staff theft - I have seen retailers in tears when they discovered what a valued staff member has done. In my experience, this is zero or 100% of the problem. If you have some virtual products, e.g. lotto or telco this can be a measure here. As a rule, experts say that it accounts for half of all retail shrinkage which means that its the most important item. 

5) Administrative errors - are pricing mistakes and sloppy bookkeeping.

For the others as a first guesstimate, most people assume that each of the above factors is equal.

In the retail world, shrinkage is a part of life but, does not mean you have to give away so much. 

Depending on your margins, a 1.4% stock shrinkage could amount to a 20% loss in profits. 


 

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POS SOFTWARE

The following are a selection of points from the newest US study on loss prevention; you can read the full list here. [Link removed]

 

The average shrink rate is now 1.33%, which is slightly up on previous years.

41% of retailers surveyed reported increases in overall inventory shrink.

36.5% of shrink is external, due to shoplifting and ORC, outpacing shrink caused by employee theft, vendor fraud and administrative errors. 

44% of shoplifters interviewed said that if an employee paid attention to them while they were committing theft, it would deter them. 

Here is one that was quoted to me not on this list one in 34 retail employees have been in the USA charged with shop theft. 

 

 

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 Woolworths is now following Coles’ lead in installing large security cameras and screens on the top of self-serve checkouts.

This is being done worldwide. Here is a picture of Tesco, a large chain in the UK doing it too.

Camera over a till

The public does not like it, but there is no choice. Shoplifting is now such a big problem. The figures quoted for Australia range from about 1.3% to 3% of retail sales depending on who you talk too. Among my clients, I have seen numbers when we calculate it between less than 1% to over 4%. The 4% guys did not last very long. 

If you want to know how to calculate your figures, I have written here a step by step approach.  Using this approach in less than an hour, you should be able to get a pretty good feel of what size of a problem you have. If you cannot use current figures, use last financial year and do not be too concerned if some values are a guess. In my experience as long as you are reasonably sure, it should be good enough to give you a decent feel. Trust me, doing nothing and being ignorant of the figure is not better.

I would also recommend that you seriously consider following Coles and Woolworth's lead in putting up such large security screens.

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Probably the best site on the net, to learn about the mechanics of shoplifting is here. <Link removed>

This is a site for professional shoplifters where you will find many discussions on shoplifting. How to do it, what to take, what to do if you are caught, fencing and so on.

Note what they say that they are a "wonderful community of allegedly corrupt and soulless individuals."

 
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A short time ago, I wrote that research had been done that showed putting a picture of eyes, on shoplifting signs dramatically improved their effectiveness. Here is a sample I showed of such signs with the eyes marked in blue.

 

Some people asked me about this, so I found these two articles on this subject for you.

http://www.realclearscience.com/blog/2015/12/the_world_would_be_a_much_better_place_if_there_were_eyes_everywhere.html http://onlinelibrary.wiley.com/doi/10.1111/eth.12011/abstract;jsessionid=A3F6C61BB8E32021E28C963D0868D31C.f04t01