Reduced Shrinkage & Increased Profit

Reduced Shrinkage & Increased Profit

[text_block style=”style_1.png” align=”left” font_size=”20″ font_font=”Georgia”]Do you know that the most successful retailers are those with low shrinkage level because they understand that low shrinkage equals high profits?

Those retailers have robust loss prevention cultures permeating the DNA of their organizations.

They create a culture in which every single employee is willing to help in the fight against shrinkage.

Dear Friends,

The average retailer makes a 1% net profit out of each dollar, and the industry shrinkage percentage is 2.6%.

This means that shrinkage is almost three times the average retailer’s profit margin.

If you take the above calculation into consideration, you will conclude that if you  reduce your shrinkage by 50% – from 2.6 cents to 1.3 cents, you could more than double your profit margin: from 1 cent to 2.3 cents.

Instead of following the conventional practices of offering huge discount to entice shoppers, the above calculation shows that you have the ability to increase your profit margin without necessarily giving away your merchandise.

If a business makes 1% profit margin and it does not take measures to reduce losses, it is only a matter of time before it calls in the administrators or go out of business.

Are you still surprise that many retailers get into trouble the moment there is a jolt in the economy?

Call now on (+44) 020 8798 0579 to start reducing your shrinkage and increasing your profit.[/text_block]


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So Why Do You Need to Increase Your Profit?

[text_block style=”style_1.png” align=”left” font_size=”20″ font_font=”Georgia”]You need to increase your profit margin because business is about profit.

If profit is not the KPI of your retail organisation, you want to consider doing something different with your time.

It is only when you make profit you will have the resources to reinvest in growing your business…invest in your marketing and in other profit generating activities.

The easiest way to make profit in retail is to reduce your shrinkage level while simultaneously increasing your sales.

Why Is Shrinkage Reduction Good for You?

There are two reasons shrinkage reduction is the simplest way of increasing retail profit.

Firstly, you cannot control sales.

There are lots of things you could do to influence the outcome of your marketing efforts.

Ultimately, you are still at the mercy of market forces.

However, when it comes to shrinkage reduction, you have complete control over the outcome.

In the large majority of cases, shrinkage is caused by the absence of the right policies and procedures.

Simple making a few changes to your current policies and procedures can reduce your shrinkage level by as much as 84%…resulting in a 51% increase in profit.

Call now on (+44) 020 8798 0579 to start reducing your shrinkage and increasing your profit.[/text_block]

[text_block style=”style_1.png” align=”left” font_size=”20″ font_font=”Georgia”]Why Are Retail Organisation Still Failing to Reduce Shrinkage?

There are two reasons retail organisations have not been able to get a handle on their shrinkage.

The first reason is the retail industry does not focus on making profit.

The focus is only on making sales.

If you focus on profit, you will realise that to increase sales without stemming profit draining activities is false economy.

Secondly, the current loss prevention strategies employed by most retail organisations is flaw.

The reason for this is the majority of retail loss prevention managers are ex-service personnel.

Who bring the law enforcement approach to a problem that has little to do with criminality.

The major cause of retail shrinkage is procedural error.

However, in retail lexicon, shrinkage is another word for shoplifting or employee theft.

When they think about shrinkage, the only thing many retailers think about is shoplifting or employee theft.

Yes it is true that shoplifting and employee theft account for a large percentage of retail shrinkage.

However, shoplifting and employee theft are a symptom of deeper procedural errors within the retail organisation.

When you take corrective measures to rectify procedure error within your retail organisation, you simultaneously stem shoplifting and employee theft.[/text_block]



Retail shrinkage also includes:

  • Administrative errors
  • Receiving error, fraud and theft
  • Vendor error, fraud and theft
  • Procedural errors

[text_block style=”style_1.png” align=”left” font_size=”20″ font_font=”Georgia”]How To Reduce Shoplifting And Retail Shrinkage

The first step in retail shrinkage reduction is for retailers to acknowledge the seriousness of the problem.

Secondly, retailers need to understand that…

Shoplifting and retail employee theft are crimes of opportunity, you remove the opportunity and you remove the possibility.

How can retailers remove the opportunity for shoplifting and employee theft from their store?

It can be done by firstly installing the right policies and procedures

Secondly, providing their employees shoplifting and retail loss prevention training.

As the below box illustrates a retail employee provided shoplifting awareness training is more effective in shoplifting prevention than any other conceivable strategy.

Shoplifting & Retail Loss Prevention Training ROI[/text_block]


[text_block style=”style_1.png” align=”left” font_size=”20″ font_font=”Georgia”]Method                                              Effectiveness

Trained Employees                              33%

CCTV Cameras                                     31%

Management                                         17%

EAS                                                         14%

Signs                                                       3%

Guards                                                    2%[/text_block]

[text_block style=”style_1.png” align=”left” font_size=”18″ font_font=”Georgia” font_style=”italic”]Retail employees trained in shoplifting prevention are more effective in shoplifting prevention than even security officers.[/text_block]
[text_block style=”style_1.png” align=”left” font_size=”20″ font_font=”Georgia”]Why Is Retail Loss Prevention Imperative?

Finally, retailers need to understand that at the heart of any good retail loss prevention strategy is the availability of product.

When someone enters your store to purchase a product and that product is unavailable as a result of theft or shortage, you have lost the sale.

It does not matter the reason for the unavailability of the merchandise, you have lost the sale period.

A good retail loss prevention strategy reduce miss opportunity, boost sales, enhance in-store experience and increase profit.

At The Business Education Center we help retailers developed effective strategies for shrinkage reduction in order for you to increase profit.

Call now on (+44) 020 8798 0579 to start reducing your shrinkage and increasing your profit.[/text_block]


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