Part of any net operating cost improvement plan should include a robust plan to manage retail and cost shrink.
“Reducing shrink is super important for increasing profitability. It is money plain and simple,” said Darren Schulte, NATSO’s vice president of membership. Schulte led a webinar on April 13 outlining 12 actionable steps operators can take to immediately improve their shrink management program.
NATSO is also offering a webinar on How to Win at Truckstop Inventory Management Webinar on June 22. Be sure to register for that important webinar here.
Schulte said average shrink is 1 to 1.5 percent, but fortunately, shrink is controllable. Here are 12 tips shared during the webinar.
Walk the stores. Schulte said he has visited nearly 200 locations since joining NATSO, but he doesn’t always see operators walking the store. “It is a very simple way to understand what is happening in your business,” Schulte said, adding that it is useful to walk the store multiple times a day, but suggests walking it in the morning at a minimum.
Keep associates busy. “Statistics show employee shrink grows when employees don’t have anything to do,” Schulte said, suggesting that cashiers walk the floor and visit with customers or front-face products when they aren’t busy. He said it is critical to get employees out from behind the counter during downtime and out in the store to keep them engaged.
Keep storage areas locked. “I’m always shocked at how easy it is to walk into back rooms and offices,” Schulte told webinar attendees. He suggests operators lock storage areas and offices and focus on security. If it isn’t possible to lock such areas, he recommends organizations create policies and procedures about who can access the areas.
Review security footage. It is important to monitor security footage, and the best way for employees to know cameras are being monitored is to find something positive employees have done and address it. “The positive is much more effective than the negative,” Schulte said. “Look at just a few seconds of an employee doing something good and reference it. Before you know it, your employees will talk about you watching the videos.”
Conduct random cash audits. A robust cash audit program can help reduce the risk of employees stealing from the cash register. Operators with the lowest shrink typically check registers several times a week during different times of the day. “You don’t have to do it every single day, but it needs to be part of your shrink control program,” Schulte said, adding that if register is off, it means someone has done something inappropriate, even it if was unintentional. Schulte also said operators should be leery of someone whose register is always 100 percent accurate. “Even if they are on the penny every single time, you may still have a problem,” he said.
Conduct counts and take inventory. Keeping track of what’s on the shelves is important, but Schulte said operators need to do something with the information. “Don’t have people do counts and then not address the issue if there is something short. It sends the message that it is okay or they won’t get caught,” Schulte said.
Check in vendors. Theft from vendors is the second highest after employee theft, and the vendor check in process is critically important. Schulte recommends vendors do credits first and that they leave with the credits and provide a credit slip. “Then they come back in and put in their merchandise. Don’t let them check themselves in or have free access to your business,” he said.
Spot check invoices. Schulte recommends operators check invoices as they review them and also suggests operators bring in a fresh set of eyes. It is important to review invoices from vendors as well as service providers, such as accountants.
Use clear trash bags. Using clear trash bags and regularly checking the trash ensures no one is stealing merchandise by first placing it in the trash.
Train cashiers. Schulte suggests locations train cashiers to ensure they’re handling customers and cash properly. “Get your cashiers in the habit of not putting money in the register until the transaction is completed, count back change, ask if the customer wants a receipt and put the merchandise in the bag. It helps you avoid some of the quick-change artists that come aboard. they make multiple transactions at one time with the register open and they try to befuddle the cashier,” Schulte said.
Watch for markers. Operators should not allow cashiers to keep coins or other markers, such as paperclips or even bottles of Five-Hour Energy, at the register. Cashiers may charge customers for an item but not ring it up. Then they place the money in the register and leave a marker so they know how much to pull out of the register later. “A penny might mean they need to pull $1 out, a quarter might mean they need to pull $25 out,” Schulte said.
Investigate drive offs. Operators should never consider drive offs as part of doing business and should always investigate when drive offs occur, Schulte said.
Most importantly, Schulte said it is important to address issues as they arise. “With all of the effort we put into making more margin dollars, if the same type of energy was placed on controlling or managing shrink, it would have a huge bottom line impact,” he said.
More of an auditory learner? You can listen to the recorded webinar below.
You can also download the truckstop shrink management slides here to follow along.
/// Don't forget! We are also offering a webinar on How to Win at Truckstop Inventory Management Webinar on June 22. Be sure to register for that important webinar here.
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