Your Economic Stimulus Check Is In the Mail
Posted: Monday, June 08, 2009
by Debra Neville
J.D. Associates
Your Economic Stimulus Check Is In the Mail How to increase your bottom line in a recession Don Capman, President, J.D. Associates Would every retailer reading this article please email me and let me know how much economic stimulus money you received from the government to help you through the current recession?
Additionally, let me know the reckless and greedy decisions you've made in the past that qualify you for this bail-out and puts you on equal footing with Wall Street, the banks and insurance companies.
Throughout this article I will be citing statistics that will be both revealing and disturbing to many of you. Unless otherwise stated, these statistics were acquired from the 2007 National Retail Security Survey Final Report authored by Richard C. Hollinger, Ph.D, and Director Amanda Adams, Graduate Research Associate, Department of Criminology, Law and Society, The University of Florida. This is an annual survey and has long been one of the most, if not the most, respected surveys on Loss Prevention in Retail. Survey participants represent a wide variety of retailers from different vertical retail segments. As noted, these statistics are derived from the 2007 survey since it is the latest published survey available. That study estimated that the average retail inventory shrink rate was at
1.44% of annual retail sales, or approximately 34.8 billion dollars which was the lowest rate recorded since the study began. Theoretically, these statistics have gotten much worse due the severe recession and the rise of Organized Retail Crime (ORC).
Let's begin talking about inventory shrink by defining the major types of shrink experienced by retailers. Most Loss Prevention Specialists put inventory shrinkage into four main categories with a fifth miscellaneous category :
1. EMPLOYEE THEFT The biggest cause of shrinkage represented 44% of all inventory shrinkage.
2. SHOPLIFTING The second largest cause of shrinkage represented 34% of all inventory shrinkage.
3. ADMINISTRATIVE ERROR This represented 15% of all inventory shrinkage.
4. VENDOR FRAUD This category represented 4% of all inventory shrinkage.
5. UNKNOWN This catchall category represented 3% of all inventory shrinkage.
EMPLOYEE THEFT Did you realize that not only is employee theft the leading cause of inventory shrinkage, but the amount stolen by employees can be as much as 5 times greater than inventory stolen by shoplifters?
Without loss prevention precautions, it can take an average of 9 months to a year to detect a dishonest employee. By the time you begin to recognize a pattern of deception, many hundreds or thousands of dollars in inventory could be stolen. Most employers do not want to believe that the same person that they decided to hire is the same person who became their silent partner. Close scrutiny in the hiring process, careful background and past employment checks, loss prevention policies and procedures and electronic surveillance systems which integrate with your POS are but a few things you can do to minimize employee theft.
Several years ago, I was asked by one of my retail clients to spend some time with her running some specific reports on customer credits. She initially didn't tell me why she wanted to run the reports but, as the day progressed, there was an AHA moment. Through the information generated by her POS, she spotted a pattern that gave her proof positive that her trusted manager had been giving his friends store credits in the hundreds of dollars. She was devastated since she had trusted him and rather than prosecute, she simply fired him. Several months later, I was in a mall and found that same thief working as a manager in a well-known, high-end woman's apparel store. OUCH!! Keep in mind, a thief will stop stealing because he got caught, and will resume his silent partnership when he thinks the coast is clear.
SHOPLIFTING This second largest cause of inventory shrink is gaining ground on employee theft at an alarming rate. When we picture a shoplifter, we usually picture a person with loose clothing and plenty of storage room. They look a little shady, and we may know that we have to keep an eye on them. They are usually not the brightest bulb on the tree and can make many obvious mistakes. I like to tell a story from my retail experience of a shoplifter who came into one of my stores and stole a video camcorder worth over $1,000. He put the camcorder under his coat and proceeded to walk out the front door when my manager noticed the precarious bulge under his coat and ordered the perpetrator to stop. Naturally, he ran out the door followed in hot pursuit by two of my loyal customers. When the jerk realized my customers were not going to stop chasing him, he took the camcorder out of his coat and threw it at them. Luckily he missed hurting them but the camcorder was toast. When my customers still wouldn't stop chasing after him, he took off his coat and threw it at them along with his wallet and ID in the pocket. Naturally, the police caught up with him but shoplifting laws are very lenient, and he got off with minimal consequences. Although I am grateful to my loyal customers for chasing the thief, I would not recommend that you encourage your customers in any way to do the same. The guy could have been carrying a weapon.
The reason that shoplifting is becoming a close rival to employee theft is because of the rise of a new and scary syndicate of criminals. Organized Retail Crime (ORC) is quickly on the rise. These are groups of criminals whose only business is to shoplift from large numbers of stores and warehouse the stolen goods. They repackage, re-serialize items, and resell the stolen items at flea markets, on online auction sites, or to other unsuspecting retailers. Unlike the common shoplifter, they can be very dangerous and have usually been involved in past violent crimes.
Vigilance, Vigilance,Vigilance. Train your staff to spot shoplifting suspects without making your good customers feel like criminals. Tell them what to do when they catch someone shoplifting. Put in surveillance systems. Many times these systems will prevent a crime from happening. Criminals are like water and will usually take the easier path.
ADMINISTRATIVE ERROR This category almost always is an indication of sloppy bookkeeping or miscommunication. Mistakes are made when reconciling inventory received or transferred, when items are incorrectly priced or when items are over or under counted or lost during a physical inventory. This cause of shrink is usually not malicious and can be dealt with by tightening up your systems and by automating some of your processes and procedures.
VENDOR FRAUD Have you ever been short shipped or shipped merchandise you didn't order? PEOPLE! Open the boxes and count what you have been shipped or not shipped. Compare your purchase orders with your receiving, and use your POS system as a management tool rather than simply a cash register.
You WILL save money. Like us, vendors sometimes make mistakes, but some of the more unscrupulous vendors try to pull a quick one on us because they know that we are too busy to notice.
Cut your losses or cut your vendors.
UNKNOWN This category will eventually spawn separate categories of its own. Fraudulent returns, bad checks, stolen gift cards or charge card theft are all categories on the rise. The bad guys always seem to be one step ahead of the good guys. Stay aware of new technologies to prevent being victimized. Also, make sure your POS is PCI compliant so hackers can't put you out of business. Be vigilant.
So forget the economic stimulus check. You don't want the U.S. Government to own your business anyway. You can do it on your own. By implementing sound loss prevention policies and procedures, proactively using technologies available today including your Point Of Sale System, and training your employees, you can give your business the economic stimulus check you will never get from the government.
ABOUT THE AUTHOR Don Capman is President and co-owner of J.D. Associates, one of the largest distributors of retail POS software in North America. With Retail Pro and Microsoft RMS in the company portfolio, J.D.
Associates offers retail POS software solutions for specialty retailers. He can be reached at don.capman@jdapos.com
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