The retail industry in different parts of the world is faced with several challenges that hinder achieving its goal, which is selling its products and making profits. Therefore, inventory losses are significant issues to the industry that owners and inventory prevention managers need to look into to prevent losses. The losses are estimated to be about 100 billion dollars' annual loss in the retail industry worldwide.
External Shrinkages
There are different types of shrinkage caused by customers, which include; shoplifting, check fraud, employee theft, and also return fraud. Shoplifting is considered to attribute the most significant percentage of retail shrinkage. These are people who come into a shop or supermarket and walk out with products without paying for them hence causing an annual loss of about 36.5 percent. Shoplifters steal items ranging from 1 to 1000 dollars in price and maybe one person or in a group; hence it's a problem to the retail industry (Becker, 2007). The offense is worth taking legal action and also implementing steps to mitigate.
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The other cause of shrinkage is return fraud, which in most cases, retailers overlook since sometimes it can be challenging to know quickly. However, return fraud takes different forms, which include; returning a stolen item, returning items that were purchased with counterfeits cash, returning a used item, using forged receipts to return an item, and also returning very different items from the purchase. Without a proper check of receipts and items by the employees, the company can register losses.
Retail Technology
The current technology in place is the use of surveillance cameras installed in every corner, entrances, and exits. These cameras have proved effective since we can see every action and moves that take place in the supermarket. In the past, we have used CCTV cameras to identify potential shoplifters. This method is only useful in preventing shoplifters and not return fraud, which is also a big problem that requires intelligence to identify. Therefore, the best way to deal with return fraud is by ensuring that every item has an electronic label (Brittain, 2018). The implementation of this method is essential since every item will be registered in our system and specified whether it already purchased or not. By doing so, it will reduce the case of return fraud since a customer cannot bring forged receipts claiming a new item when that item is not registered in our inventory system.
Remedies for Theft Reduction
It is crucial to undertake the following mitigation steps to reduce cases of theft and losses in the retail industry. The first is to ensure that there are proper working surveillance cameras in every corner of the store; hence shoplifters will be caught in the event they try to leave the store without paying for merchandise. Customers will know that doing such acts will lead them to legal action taken against them. The second way to reduce theft is by offering excellent client services. The behavior of the staff can change the intention of the customer who intended to steal. Staff should always around and greet the customer the moment they are in the store looking for items to purchase (Shapiro, 2019). This will send a message to the ill-motive customer that the staff is looking at them; thus, they will not steal.
Thirdly, it is essential to take the recruitment process very seriously, to take into consideration employees' integrity before employment. Through audit of hiring, practices, retailers will be able to identify staff who are honest and cannot cooperate with shoplifters or return fraudsters to steal from their employer. Retailers will save a lot of money the moment they take mitigation steps seriously, including providing proper training to staff.
Conclusion
It is clear from the discussion above that the retail industry is not making the expected profits due to shoplifting, check fraud, employee theft, and also return fraud. However, the implication of mitigation steps such as proper training of employees, installation of surveillance cameras, integration of automated electronic labels on items, among others, leads to the reduction of losses.
References
Becker, G., Borsch, R., McBeath, B., Peacock, C., Plante, K.M., Ryski, M., & Trlica, C. (2017). Retail technology: Electronic article surveillance, RFID inventory management, and video trends. https://losspreventionmedia.com/getdownload/download/?dtd=2239 (2.5.2019).
Britain. (2018).Shoplifter safety: Knowing when to let it go. LMP, V1.2: https://read.nxtbook.com/lpm_online/loss_prevention_magazine/december_2018_v2_6/shoplifter_safety_knowing_whe.html (2.6.2019).
Shapiro L.R. (2019) Retail Shrink: Shoplifting. In: Shapiro L.R., Maras MH. Encyclopedia of Security and Emergency
