Shrinking Your Shrinkage

One of the biggest issues facing any retailer is shrinkage: the loss of products between point-of-purchase from supplier and point-of-sale. Some shrinkage seems unavoidable as environmental issues within your store could damage goods through floods or mishandling of goods. Shrinkage can also come in other forms, such as employee error and theft, customer theft or even supplier error.

Two of the easiest forms of shrinkage to manage are supplier error and mishandling of goods within your store. Supplier errors are easy to rectify and potentially avoid; when you receive a new shipment, go through your order and ensure it is all there. If something is missing, note the discrepancy and contact your supplier. With the large amount of orders that are filled every day by your various suppliers, human error can easily occur. Most suppliers will be happy to correct the problem and get your order filled correctly.

Mishandling of goods within your store should be just as easy to manage. Ensure no paper-based products are placed near areas that are known to flood or that can flood. If you live in an area that is known to have flood issues, place all paper-packaged goods up on the second shelf or above where water normally rises. Don’t place these same items under known water pipes that could possibly leak and destroy the packaging. Stack goods in your storeroom correctly and watch that nothing heavy is placed over rods or fragile items that could someday fall and break them. Common sense can go a long way when storing items in your storage room; just because it is convenient to store items a certain way doesn’t make it more profitable if your storage solution keeps losing money for you.

Employee theft or error covers a wide range instances and many times employees are not even aware of the profit they are losing you. Everything from not properly inventorying goods, mislabeling prices on products, to offering something as small as free fishing line when it should be paid for adds up to profits lost. It is important when you see employees giving away more than they should, or improperly pricing items that you step in after the customer walks away and correct the issue. Many times the employee misunderstood your store’s policy or was just trying to close the deal with an added incentive. Work with them and explain how your store losing money can impact their paychecks at the end of the day. Many will see the light and correct the situation going forward.

If you ever have an employee though, that suddenly feels the urge to take more than they earn or go home with items they didn’t pay for, you need to step in immediately and correct the situation. If you wish to get the legal system involved, contact someone in local law enforcement first and ask what proof you need and how you should proceed. There is no need to make an accusation and face slander charges or damage a person’s reputation because you just have a feeling they are doing wrong. Document everything that you can and then take the proper steps to remove the temptation from the individual either by changing their role in your store, or removing them from your payroll. In close-knit communities this could cause issues, so again, be sure of your actions before you take them. The key to controlling employee shrink issues is to ensure everyone knows the store’s policies, has signed off on them, and is aware of what the consequences will be if they disregard them and what their role as an employee is for your store. Hopefully no one who reads Fishing Tackle Retailer magazine ever has to face this issue.

The most painful form of shrinkage to many retailers is customer theft. It happens without warning and many times is not discovered until well after the theft has occurred, leaving you with just an empty package or an empty display. There are ways to curtail theft from shoppers, and no matter where your store is located, you are vulnerable to these people.

Most shoplifters get by in life by just blending in and not standing out. This can be more difficult in a fishing store, but not impossible. They seem to always know when to come in and do their form of shopping during your busiest times. Some may even make small purchases while shoplifting in an attempt to throw you off. You need to work with your employees and remind them that they are responsible for all of the customers who are in the store when they are on duty. It is reported that if you interact more with all customers including shoplifters, the less likely they are to shoplift at your store. This is also a great reason to have your employees engage every customer that enters your store, especially the ones that do not seem like anglers or potential customers.

Keep your high-theft items in plain view at all times. High-end reels, knives, and your more expensive fishing lures should always be either in a locked cabinet with just one or two on display or placed somewhere in your store where they can be easily viewed from different angles. Having a thief leave with a 50¢ lead weight is one thing; having them walk out with a reel worth several hundred dollars is quite another. You owe it to your employees and your store to ensure your store is laid out to reduce the chance of theft.

Install mirrors, cameras or other theft-deterring items including signage stating that your store will prosecute any and all shoplifters. Talk to your local law enforcement and see how they would prefer you proceed if and when shoplifting occurs in your store. Many would prefer you call them first instead of confronting the offender on your own. After you have talked with your local authorities, create a plan for your store and let all employees know how you wish to handle situations when they arise. Some retail stores have a policy that does not allow employees to interact or chase after shoplifters in order to reduce the threat of injury to their employees. Pick a rule that works for you and stick to it.

It is a shame that society has progressed to the point that we all now need to worry about theft and product loss no matter where we live or work. The times have changed and hopefully you have as well or will after reading this. What are your store’s policies on shrinkage, or what have you done to reduce this profit loss? Share your store’s policies with us all on our Facebook page or in our LinkedIn group and see what others do to keep their profits up.