Shrinkage in retail, a comprehensive update - Part2

Shrinkage levels in india at 3%, seriously? Perhaps yes, but the culprit is not the average consumer. For one the art of shoplifting has not achieved the status and maturity of western world, moreover in most of the stores, systems are designed by assuming that the customer is there to steal something (like checking the bags, bag deposits, frisking etc).  But if we take the data as given, what are the ways to stop this menace?

Anti-shoplifting options

Shoplifting can be prevented from taking place or can be detected once it has happened. Most of the retailers depend on both the strategies.

Examples of such options are:

Closed-circuit television:  CCTV records the retail floor activities and in case of any suspicious activities the authorities can refer the videos. Such videos are also very useful if the case goes into legal proceedings. CCTVs are both preventive and detective in nature, many shoplifting thoughts are nipped in the bud by the presence of such cameras. In many stores there are dummy cameras to fool shoplifters.

CCTV is more effective if used in conjunction with an advanced technology like EAS. While EAS system can alert of a potential shoplifter, the video can provide ample proof to prosecute the offender.

Electronic article surveillance EAS

Electronic article surveillance is a technological method for preventing shoplifting from retail stores. The EAS system monitors the merchandise, not the customer. Special electronic tags are placed on predetermined items throughout the store, and surveillance systems are placed at store exits which sound an alarm when tagged merchandise is detected. This technology is quite widely employed by the modern retailers these days.

Loss prevention personnel

Loss prevention personnel will patrol the store in a low key manner. They may try on merchandise and roam on the shop floor, all the while looking for signs of shoplifting and looking for possible shoplifters.

Uniformed guards
In a country like India the presence of uniformed guards acts as a strong deterrent to shoplifting activity  

Baggage Counter

By not allowing the customers to take their bags inside, the store minimizes the chances of shoplifting or otherwise embarrassing moments of baggage inspection at the time of exit

Exit inspections
Shoppers in some large stores are asked when leaving the premises to have their purchases checked against the bill. This is a mean to counter both shoplifting as well as internal thefts (an employee colluding with the customer and deliberating cutting the lower bill). In India some of the biggest chains are practicing this. 

Close customer service
Floor attendants are instructed to greet, follow, and offer help with customer shopping. Shoplifters are not comfortable with this attention and will go somewhere else. 

Locked merchandise
Some expensive merchandise (or something which is difficult to Tag or very easy to steal, like goggles, earrings etc) will be in a locked case requiring an employee to get items at a customer's request. The customer is either required to purchase the merchandise immediately or it is left at the checkout area for the customer to purchase when finishing shopping. This prevents the customer from having a chance to conceal the item.

 

Dummy cases
Some stores will use dummy cases, also known as "dead boxes", where the box or case on the shelf is entirely empty and the customer will not be given the item they have paid for until after the transaction has been completed, usually by other Store staff. We see most of the mobile retailer opting for such dummies. Some companies might also use dummies to reduce the inventory load.

Personnel policy

The choice of store and security personnel can strongly affect the ability of shoplifters to succeed. A study conducted in US by National Retail Security Survey found a link between employee turnover (attrition) and shrinkage. The possibility of a newer employee attempting fraud is higher, because they have little at stake. Moreover they are new to the system and might not identify/stop a fraud compared to the old time loyalists. So it’s important to retain your good employees and it pays in many ways other than the obvious.

Test shoppers

Subject of testing is primarily the alertness of surveillance staff and of the staff operating in the shopping areas.

Retailers also have their own ways of minimizing shoplifting. Book shelves in Landmark stores are under 4 feet so as to give it an open space feel. All customers are always visible to sales staff in such settings.  Stores like MORE and Spinach keep the most frequently pilfered items (like razors and chocolates) placed next to the cash counter, under employee supervision. Pantaloons has set up a Perpetual Inventory system across all its stores to regularize weekly stock take of Top 100 high shrink articles. 

Similarly Shoppers’ Stop has divided all its products into three categories. Category A, which is checked four times a year, includes high-value and often-stolen items — jeans and dupattas.
Lesser value items are in category B and bulk and low-value items like imitation jewellery form category C, which is checked only once a year.

The shrinkages witnessed by Indian organized retailers are in the range of 0.3 per cent to 1.5 per cent of sales. Some of the most pilfered goods from new format stores include cosmetics, alcohol, women’s apparel, razors, perfumes, small electronic gadgets like CDs and video games. 

Indian retailers are not forthcoming with their shrinkage levels, perhaps because they are a bit high for most of them or maybe because most of them might not know the exact figures themselves.

An estimate of the shrinkage levels among Indian retailers is like:

The recent downturn might have just changed the things a bit. The retailers who were blinded by the growth targets were finally forced to improve their efficiency by looking at their cost structure and shrinkage levels. We can hope that we will soon give up our top position in that rather unflattering list.

On the lighter side though “It requires real skills to defeat dozens of cameras & all these modern technologies : )”

Now as promised here are some interesting posters:

shop lift -2

shop lift -No drugs. No shoplift