This article is part of a larger series on Retail Management.
While unfortunate, theft is a part of owning and managing a retail business. It is a primary contributor to retail shrinkage, which accounts for around 1.5% of retailers’ bottom line (billions of dollars each year).
Here we will take a look at five of the best retail theft prevention tips for your business:
1. Identify the Source of Your Losses
Before you can address your losses, you have to determine where they are coming from. In general, there are three types of theft within the retail industry: employee theft, shoplifting by customers, and clerical errors in your inventory counts. All require different strategies for addressing them, so determining exactly where your losses are coming from is the only way to start devising a prevention plan.
Shoplifting is a major source of loss for retailers and for each shoplifting incident, retailers lose an average of $461.86. When considering shoplifting prevention for your store, you should know the common ways that shoplifters will steal so that you can begin to detect issues:
- Tag swapping: Switching high price tags with lower ones.
- Bag stuffing: Filling a bag or purse with your goods.
- Clothing concealment: Concealing products under their clothing.
- Packaging removal: Removing packaging and security tags to avoid setting off alarms.
- Fraudulent returns: Trying to return an item they did not purchase or making false claims to get their money back.
- Counterfeit money: Using fake currency to pay for goods.
Learn how to avoid dealing with fake currency in our guide to detecting counterfeit money.
Employee theft is another major contributor to inventory shrinkage. Sometimes employees will outright take merchandise from their employers—because they are dissatisfied, feel underpaid, or simply want the merchandise or extra cash they can make from selling it. Employee theft can also include cash skimming, offering discounts to friends, or ringing things up incorrectly to save themselves or others money.
Cash skimming: When an employee takes money from their employer before recording the cash in the reporting system so it becomes more difficult to detect.
Despite being the factor most within your control, clerical errors are still a primary cause of inventory shrinkage. Typically, these errors are due to purchasing and receiving errors, inventory count mistakes, damaged or lost merchandise, accounting inaccuracies, and other errors in the inventory management process.
A fully integrated point-of-sale (POS) system like Lightspeed will automate many aspects of your inventory management process, allowing you to get accurate and real-time stock counts, sales reports, and business insights. This will not only save you time but also increase your accuracy and reduce your losses.
2. Use a Well-trained Staff
One of the best ways to ensure that your store is safe is to train your staff on retail theft detection and prevention techniques that they can practice in-store. Here we will take a look at some of the top strategies that your staff can implement to deter shoplifting.
Engaging With Customers
If you have attentive and engaged staff, thieves will feel watched, making them less likely to steal from under your nose. Tell your staff to greet everyone upon entry, offer frequent fitting room check-ins, and be attentive to all your shoppers should any needs or questions arise. In addition to deterring theft, this level of engagement will also foster a positive customer experience for your regular customers.
For example, at my boutique, we greeted every person that came into the store with a warm hello and an introduction to all the promos we had going on at the moment. Then we would continue to offer assistance and would get fitting rooms started as soon as shoppers had things in their arms. This engagement not only ensured that our regular customers got tons of customer service and felt cared for, it also made thieves feel watched and deterred them from stealing.
Want to learn more about the best ways to greet customers when they enter your store? Check out our tips for welcoming customers into your store.
Theft (Shoplifting) Identification
Another way that you can prepare your staff for theft is to teach them about warning signs and theft identification. While your staff should not put themselves in harm’s way by trying to apprehend a thief, they can intervene with good customer service if they spot signs of theft. Additionally, if your staff knows how to identify suspicious behaviors, they are more likely to notice the act of stealing as it happens so they can describe it to authorities.
You can learn more about preventing loss in your store with our article on the top strategies for retail loss prevention.
Here are some signs of theft your staff can look out for:
- Nervous behavior (rocking, looking around, fast walking)
- Avoiding eye contact
- Wandering without making a purchase
- Returning to your business repeatedly within a short period
- Staying in low-visibility areas
- Carrying large bags or purses
Keep Fitting Rooms Staffed
Fitting rooms are a hot spot for thieves since they are concealed. The best way to ensure that your fitting rooms are secure is to keep them staffed at all times. For every shift, be sure that there is at least one person on the register and one in the fitting area. Train every employee to be attentive to shoppers trying on merchandise–asking them questions, giving them advice, and offering assistance. This should make thieves feel less secure and help to deter theft.
For example, at my store, we never let customers spend too long unattended in their fitting rooms. After a few minutes, we would simply knock on the door to see if they needed anything or if we could take anything out of their way. This made our regular customers feel taken care of and encouraged them to try on more pieces and also prevented potential thieves from getting too comfortable in the fitting rooms if they were up to something.
Educate Staff on Employee Theft
The final thing you should do when training your employees on theft is to make them aware of the measures you take to detect and prevent employee theft. If your staff knows that you are on the lookout and are taking steps against all theft, then they will be much less likely to engage in the behavior.
Did you know? Popularly reported statistics indicate some 75% of employees have admitted to stealing from their employer at least once, and employee theft costs businesses up to $50 billion annually.
Let your staff know about all the retail theft prevention tactics you are taking—that you track inventory and source shrinkage problems, run audits, and have a video camera installed. Additionally, if you are using a POS system, consider creating separate log-ins for each employee so you can track which employees rang up specific transactions.
3. Lay Out & Merchandise Your Store to Deter Theft
You should also prepare your physical space to deter theft. An organized storefront without clutter or disarray makes it more difficult for thieves to steal by opening up your sightlines and making it more obvious when something goes missing. Additionally, smart product placement and loss-prevention merchandising techniques can also help protect your store from theft.
Identify High-risk Items & Areas
When organizing your store, you should start by identifying your most at-risk items. Typically, these are smaller items that are easy to conceal or more expensive items that are a bigger theft target. You should do what you can to place these products close to the register or in areas with high visibility.
In my store, for example, we kept all of our jewelry at the register. We knew that our small and higher-value jewelry pieces were the most likely to attract thieves. By placing our most “stealable” goods at the register, we could keep an eye on it at all times and intercept any shoplifters.
Here is a list of the top types of stolen retail items so you can take steps to protect them:
From there, you should also identify the areas of your store that are at the highest risk for theft. Concealed areas or places where you keep a lot of easy-to-nab items are popular with thieves. As you organize your space, try to move shelving, open up spots with poor sightlines, and keep smaller merchandise in open areas.
Put High-value Items in Locked Cabinets
Another way that you can organize your merchandise to prevent shoplifting is to place your highest-value items in a locked case located centrally in your store. This will keep your goods secure and allow you to keep an eye on them from all areas of your store.
You will often see this strategy in jewelry stores, where all their merchandise is displayed in cases that clerks operate behind. This same strategy, however, can be applied to many different settings on a smaller scale. Take the first image below, for example. This trendy boutique did not have to sacrifice its brand or store flow to create a secure and stylish display case for its most expensive goods.
Place Your Cash Wrap Near the Exit
Another organization strategy that you can use to prevent theft is to place your cash wrap, otherwise known as the checkout counter, near the exit of your store. In general, when shoppers enter a space, they will naturally turn to the right and then make a loop through your store. With this in mind, the best place for your cash wrap is to the left of your entrance.
This placement will allow you or your associates to greet shoppers when they enter, signaling to them that you are aware of their presence, it will also allow you to keep an eye on everyone leaving the store. Both greeting people at entry and stationing yourself close to the exit path will make thieves feel like they are being monitored, working to deter them from theft.
4. Install Signs & Mirrors
Signs and mirrors are a cost effective way to send a message to shoplifters. (Sources: Amazon (r) and My Security Sign (l))
In addition to setting up your employees and space to create an attentive, watchful environment, you can also use signs to let thieves know they are being watched. If you have security cameras, use signs to tell shoppers that they are on camera or display signs that let people know that you take shoplifting seriously and are looking for offenders. If used appropriately and in moderation, these signs won’t disrupt the average shopper but will put thieves on edge and deter them from committing a crime.
For example, at my store, we had a “smile, you’re on camera” sign posted at our door. As a boutique in a nice neighborhood, this was the extent of our security signage. It was enough that everyone saw it as they came in, but not so much that it became accusatory toward normal shoppers.
Another security feature that you can install in your store are mirrors, like the ones below. On the left, you see a convex mirror, perfect for installing in corners with poor sightlines either due to the shape of your space or the arrangement of your furniture pieces. On the right, you have another option: the dome mirror. These are perfect for giving you a 360-degree fisheye view in large spaces.
Add mirrors to create better visibility throughout your store.
Mirrors are great for improving your visibility, and thieves know this. You can use mirrors to ensure that no area of your store is out of sight, so thieves don’t have an opportunity to engage in their crimes.
5. Adopt Security Technology
Although training, signs, and mirrors are great at reducing retail theft for the small businesses, if you want to level-up your protection, consider installing security equipment, such as cameras and RFID tags.
The most obvious security technology option is a video surveillance system. Video security cameras not only allow you to check on your customers and employees but also will provide an obvious visual deterrent to would-be shoplifters. Further, cameras will capture any criminal activities on tape, giving you photographic proof should you ever need to prosecute a shoplifter.
While discreet cameras are sleek and won’t impede on the look of your space, they are not really your best choice for business security. You want your surveillance system to be obvious. I recommend opting for larger surveillance cameras paired with a monitor where people can see that they are being recorded.
Entrance Alert System
One of the most common types of security technologies is an entrance alert system. This can be as simple as a bell on your door that chimes each time the entry swings open, or it can be an automated alert that senses each time someone new enters your space and dings for you to hear. Either way, alert systems let shoppers know that you know they are in the space and can be a deterrent for thieves.
If you have a large storefront, be sure that you can hear the alert from everywhere in the space.
RFID tags or Radio Frequency Identification tags are small stickers that you attach to the back of product tags that send radio signals to a small receiver. An RFID scanner at checkout will deactivate RFID tags. However, if someone tries to leave your store before the tag’s deactivation, an alarm will sound.
While RFID tags are a great deterrent and can be highly effective at catching thieves in the act, shoplifters are often aware of their use and will remove the tags. The best way to spot this behavior is to introduce nightly tag checks to see if there are any lost RFID tags that a shoplifter might have removed. Another option you can try is RFID tags that are attached by an ink-loaded plastic piece, as pictured below, that you have to remove manually with a special device at checkout.
When integrated with a POS system, RFID tags will also give your inventory management a leg up. They can give you accurate and real-time insights into your orders and receiving, current stock levels, shrinkage, and more.
Theft is an unfortunate reality of the retail industry and can cause your business to incur major losses if not taken care of systematically. With the tools in this article, you will be able to take steps for retail theft prevention in your business. Whether you use a high-tech solution or rely on attentive staff, you can work to mitigate and hopefully stop theft.