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Retail Loss Detection and Prevention - Policies and Procedures

Learn retail loss detection strategies for small businesses. Learn to identify the most common loss and fraud hazards of retail entities.

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Retail Loss Detection and Prevention - Policies and Procedures

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  1. Retail Loss Detection and Prevention Policies and Procedures By -John E. Grimes III, MS, CFE, CFI

  2. Loss prevention defined Loss Prevention is the concept of establishing policies, procedures and business practices to prevent the loss of inventory or monies and preserve profit in a retail environment.

  3. Role of Loss prevention • While each retail company approaches the mission and purpose of their loss prevention programs based upon the unique needs, structure and culture of the organization, at its core the role of loss prevention is to enhance the profitability of the company – just like every other role in retail. Primarily, that role focuses on the reduction of shrink (losses). • Loss prevention departments look at all of the various issues that can potentially lead to losses, devise strategies to minimize those pitfalls within the business, and implement strategies that are practical, actionable, and consistent with the goals of the business.

  4. Shrinkage (shrink) • Inventory Losses in a Retail Environment are referred to as Shrinkage. • Shrinkage can best be described as the amount of merchandise physically available in a location versus the amount of merchandise that should be on hand based on inventory records. In simple term it is missing product.

  5. Measuring shrink • There are many other factors that are accounted for when determining the expected inventory count other than purchases and sales. They include: • Markdowns • Markups • Returns by customers • Returns to the supplier • Damaged merchandise

  6. What causes inventory shrinkage • Internal Theft (various schemes, including cash theft schemes) • External Theft • Vendor Theft • Paperwork Errors • Inaccurate shipments • Inventory miscounts • Poor receiving practices • Failure to record all markdowns.

  7. Non-inventory dollar losses • Non-inventory related losses that occur at store level. • Net Cash Register Discrepancies • Net Deposit Loss and Discrepancies • Credit Card Charge backs • Bad Check Loss • Gift Card Loss due to theft • Cash Robberies

  8. THIS IS WHY IT IS IMPERATIVE THAT LOSS PREVENTION BECOME A CRITICAL COMPONENT OF BUSINESS PHILOSOPHY!

  9. The 5 ps of loss prevention

  10. Philosophy

  11. Policies

  12. Procedures

  13. Practices

  14. PeopleTHE HUMAN FACTOREmployee Theft

  15. 10-10-80 Rule

  16. Understand why some of the 80% fall on the wrong side of the fence.

  17. OPPORTUNITY RATIONALIZATION PRESSURE

  18. Thank you !

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