| by Connie R. Edwards, Georgia SBDC Some of the people around town are thrilled to be able to take advantage of the free samples of merchandise available at the new gift shop. The problem is that Michael, the proud owner of the new shop, doesn't know anything about the "free samples." But some of his customers and many of his employees are helping themselves to the merchandise in the store. Unfortunately, it could be some time before Michael finds out about his loss. Unless he is keeping excellent records, he may not realize he's having this trouble until he begins experiencing significant cash flow problems. bed and breakfast ArendalMost inventory loss (shrinkage) experienced by retail business owners is the result of shoplifting and employee theft. A small portion comes from delivery errors, breakage, and paperwork errors. So Michael is not alone in his problem. However, like many new business owners, he is probably not aware of the actions he can take to reduce his losses. Reducing losses begins with keeping excellent records of merchandise purchased and merchandise sold. One can keep records manually in a very small store, but there are computer systems available that can make this record keeping much easier, including systems that automatically scan items when the customer checks out. Hamburg cheap hotelsTaking a regular physical inventory is necessary if a business owner wants to keep accurate inventory records and detect problems with losses. The owner should pay close attention to the amount of shrinkage and how it affects the cost of goods sold. There are statistics available for different industries showing averages for shrinkage, cost of goods sold, and how often owners take physical inventory counts. It is important to be aware of these averages to properly manage inventory and to determine if there is a significant problem with inventory loss. There are various ways to discourage shoplifters, as they normally steal only when there is a clear opportunity. A proper store layout can make it difficult for shoplifters to conceal their activities. This strategy includes keeping expensive items near the checkout counter, under glass, or in a locked case. Other techniques include having the checkout area near the front and making it easy for storeowners and employees to see shoppers through proper alignment of aisles and installation of mirrors. ERROR MSGThe presence of security cameras (even fake ones) discourages shoplifting. If the store is large enough to have a PA system, frequent announcements (even fake ones) concerning having a "security check" in "section B" of the store make shoplifters nervous and less likely to act. Storeowners should move around the store, greeting and recognizing customers. The good customers appreciate this attention, but the shoplifters hate being noticed. Also, shoplifters have been known to use children to steal items or to create a distraction while the shoplifter takes the merchandise.
Of course, owners must use good judgment when preparing to confront a suspected shoplifter(s). The storeowner should know before the situation emerges what his legal rights are and how he will handle shoplifters. He should also carefully consider whether or not he can handle the given situation. Physical confrontations are possible and may not be worth the risk. Store owners should be sure employees are properly trained to monitor customers and know what actions to take if shoplifting is suspected. It should be a consistent store policy to prosecute all shoplifters that are apprehended. Many storeowners post this policy in clear view to discourage shoplifters. Some storeowners hire a security guard to help monitor shoppers. However, this tactic can be very expensive, and the cost and potential benefits should be carefully studied before making the decision to hire a guard. In addition, some stores even have problems with security guards that steal merchandise. Part II of this article will discuss preventing inventory losses due to employee theft, delivery problems, and other potential causes. To get further information and counseling concerning protecting inventory, contact your local Small Business Development Center. > See also: Risk Management | 
