Oh my god - new definition for a sweetheart (Retail shrinkage)

Sweethearting is a term used in the retail shopping industry to mean intentional margin loss/shrink through employee theft at the cash register or the cash counter. Sweethearting is the most common type of employee theft.

Sweethearting is unauthorized giving-away of merchandise or products without charge to a "sweetheart" customer (e.g., friend, family, fellow employee) by the fake scan or ring-up of merchandise by the cashier or the stores payment clerk. Employees operating cash registers can create numerous ways to sweetheart

• Scan avoidance: By deftness of hand the product is not scanned at all.
• Price overrides: Price is shown less than what it should be
• Refund fraud, gift card fraud: create a fraud with a refund of a merchandise or fraudulent uses of a gift card
• Invoicing scams: Happens at the input level or at the time of receiving the material from the supplier.

Sweethearting can be difficult to detect. Common countermeasures include use of CCTV surveillance cameras and security guards checking customer receipts at exits.

 

So Sweethearting exists and what do we do about it? First tell the employees that they too are being watched and at all the time. Second thing is to tell the employees that shrinkage means reduction of profits and that means less salary and less commission or incentives.

 

If the employees are vigilant the shrinkages will get reduced. Pay the employees a part of the money saved due to reduced shrinkage. So instead of having the employees work against you, make them part of the team that works for you cracks the menace of Sweethearting.

Popular terms and concepts in Retailing & Retail Marketing

1.      Slotting fee: A slotting fee, slotting allowance, pay-to-stay, or fixed trade spending is a fee charged to producer companies or manufacturers by supermarket retailers in order to have their product placed on their shelves. The fee varies depending on the product, the manufacturer, and market conditions.

In addition to slotting fees, retailers may also charge promotional, advertising and stocking fees. Many retailers earn more profit from agreeing to carry a manufacturer's product than they do from actually selling the product to retail consumers.

Many argue saying that slotting fees are unethical as they create a barrier to entry for smaller businesses that do not have the cash flow to compete with large companies.

2.      Push money: Push money is a special incentive that is offered to a retailer in exchange for focusing sales efforts on a particular product or brand of products. This incentive may take the form of a special commission for all generated sales related to the specified product or brand, or come in the form of some other type of compensation, such as a paid vacation or holiday.

3.      Point-of-purchase displays, or POP displays: are marketing materials or advertisements placed next to the merchandise it is promoting. These items are generally located at the checkout area or other location where the purchase decision is made. For example, the checkout counters of retail stores are cluttered with cigarette and Chocolates and many other impulse purchase category items.

4.     Point of Sale (POS):  refers to the area of a store where customers can pay for their purchases. The term is normally used to describe systems that record financial transactions. This could be an electric cash register or an integrated computer system which records the data that comprises a business transaction for the sale of goods or services

5.     Mom and Pop stores/Kirana shops: A small, independent, usually family-owned, controlled, and operated business that has a minimum amount of employees has only a small amount of business volume and is typically not franchised, therefore open for business only in a single location. Typically running on a very tight budget and wafer thin margins they are profitable only because the entire family pitches in and run it as a business.

6.      Brick and mortar store:  refers to retail shops that are located in a building as opposed to an online shopping destination, door-to-door sales, kiosk or other similar site not housed within a structure. Brick and mortar are the traditional touch, feel and tryout type of supermarkets. They are real and not virtual.

7.      Planograph: Visual description, diagram or drawing of a store's layout to include placement of particular products and product categories.

8.     Comp sales: Comparable-store sales is a measurement of productivity in revenue used to compare sales of retail stores that have been open for a year or more. Historical sales data allows retailers to compare this year's sales in their store to the same period last year.

9.   Cyber Monday: Cyber Monday is one of the busiest shopping days of the year for online retailers. This comes after the Thanksgiving weekend. Retailers notice a spike in sales on this day as many consumers who were too busy to shop over the Thanksgiving weekend or did not find what they were looking for, headed to the web on Monday from work or home to find bargains.

Shoplifting - store design and Customer service Management

Store design to reduce shoplifting: It has been reported that employee theft and shoplifting combined account for the largest source of property crime committed. The easiest way for retailers to discourage theft in a store is by taking away opportunities to steal. A little thought into the store's layout and design can prevent theft before a loss occurs.

Here's How:

1.      Checkout: Design the store lay out so customers must pass the register area and staff to exit the store. Never leave the register unlocked or unattended. Do not display merchandise near the store exits.

2.      Tidy Up: Keep the store neat and orderly. Full displays and straightened shelves allow employees to see at a glance if something is missing.

3.      View All: Use mirrors to eliminate blind spots in corners that might hide shoplifters. Maintain adequate lighting in all areas of the store; keep fixtures and displays low for better visibility.

4.      Under Lock and Key: Place small, expensive items in locked cabinets or behind the counter. Rest rooms and dressing areas should be watched at all times. Keep dressing rooms locked and limit the number of items taken in by each customer. Use alarms on unlocked exits and close or block off unused checkout aisles.

5.      Signage: Signs and posters reinforcing security messages should be used. Post anti-shoplifting signs like 'Shoplifters Will Be Prosecuted' in clearly visible locations.

6.      Security: Use security equipment such as closed circuit television, security tags and two-way mirrors. Uniformed security guards are also powerful visual deterrents to the shoplifter.

Customer service to prevent shoplifting: Good store management can be an effective tool against shoplifting. Retailers should also use store layout, adequate inventory controls and follow common security practices to combat shoplifting. Another form of prevention is to use customer service techniques to take away opportunities to steal.

Here's How:

1.      Staffing: Schedule an adequate number of employees to work at one time.

2.      Greetings: Greet every customer that enters the store. This lets the customer know you are aware of their presence.

3.      Be Attentive: Make yourself available to all customers and never leave the store unattended.

4.      Receipts: Give each customer a receipt for every purchase. Require receipts for refunds for cash. Trash any discarded receipts immediately.

5.      Stay Focused: Don't allow customers to distract the cashier while another person is being checked out.

6.      Bag Check: Implement a policy and procedure for backpacks and bags brought in by customers.

7.      Code 3: If you notice suspicious activities, alert other employees immediately. Many stores have a security code to alert staff of possible shoplifters.

8.      Helping Hand: Approach the suspicious person and ask if he/she is finding everything okay. Mention that you’ll be nearby should he/she need your help. Make the shoplifter feel watched.

9.      Tag Swap: Cashiers should watch price tags and be on the lookout for price switching. Ask for a price check if something seems out of place.

10.  Hidden Items: Shoe boxes, pocket books, baskets with lids and any other product easily opened should be inspected by cashiers to be sure it does not contain other merchandise.

11.  Sealed Shut: Every bag should be stapled closed, with the sale receipt attached.

Shop lifting and Shoplifters

Shop lifting and shop lifters. Shoplifters can be placed in one of two categories, professional shop lifters and amateur shop lifters. While both groups can be quite skilled at the art of thievery, professional shoplifters steal to make a living and may use force or intimidation. The non-professional shoplifter may be easier to spot.

Shoplifter Methods: Many of these thieves work in groups of two or more to distract the sales staff while they pilfer or steal. Shoplifters learn to take advantage of busy stores during peak hours or they may hit at times when employees are less alert, such as opening, closing and shift changes.

Customer theft occurs through concealment, altering or swapping price tags, or transfer from one container to another. Hiding merchandise is the most common method of shoplifting. Items are concealed in the clothing of the shoplifter, in handbags, strollers, umbrellas or inside purchased merchandise. Bold shoplifters may grab an item and run out of the store. Other methods include price label switching, short changing the cashier, phony returns, and so on.

Spot the Shoplifter: Unfortunately, there is no typical profile of a shoplifter. Thieves come in all ages, races and from various backgrounds. However, there are some signs that should signal a red flag or danger signal for the retailers. While the following characteristics don't necessarily mean guilt, retailers should keep a close eye on shoppers who exhibit the following:

·         Spends more time watching the cashier or sales clerk than actually shopping.

·         Wears bulky, heavy clothing during warm weather or coats when unnecessary.

·         Walks with short or unnatural steps, which may indicate that they are concealing lifted items.

·         Takes several items into dressing room and only leaves with one item.

·         Seems nervous and possibly picks up random items with no interest.

·         Frequently enters store and never makes a purchase.

·         Enters dressing room or rest rooms with merchandise and exits with none.

·     Large group entering the store at one time, especially young men and women. A member of the group causes a disturbance to distract sales staff.

Preventive Measures: One of the most effective tools to prevent shoplifting is good store management. Retailers should also use store layout, adequate inventory controls and follow common security practices to combat shoplifting.

Types of Retail shrinkage

The percentage of loss of products between manufacture  and  point of sale is  referred  to as  shrinkage,  or sometimes called shrink. The average shrink percentage in  the  retail  industry  is about 2% of sales. While that may sound low,  shrinkage  cost  U.S.  retailers  over $ 31  billion  in  2001.  The  four  major  sources of inventory shrinkage in retail.

1. Employee Theft: The number one source of shrinkage for a retail business is internal theft. Some of the types of employee theft include discount abuse, refund abuse and even credit card abuse. Unfortunately, this is one loss prevention area that generally doesn't receive as much monitoring as customer theft.

2. Shoplifting:  Coming in at a close second is shoplifting. The crime of shoplifting is the taking of merchandise offered for sale without paying and more than $25 million worth of merchandise is stolen from retailers each and every day. Customer theft occurs through concealment, altering or swapping price tags, or transfer from one container to another. While shoplifting remains a smaller inventory loss source than employee theft, stealing by shoppers still costs retailers about $10 billion annually. One interesting way of shoplifting is to take an edible product like biscuits or a bar of chocolate and eat it in the shop itself. That way the product is consumed without paying a cent!

No matter how big or small the retail store may be, all types of retailers are susceptible to the growing problem of shoplifting.

3. Administrative Error: Administrative and paperwork errors make up approximately 15% of shrinkage. Simple pricing mistakes due to markups or markdowns can cost retailers quite a bit. Administrative errors such as shipping errors, warehouse discrepancies, and misplaced goods or  Cashier or price-check errors made in the customer's favor.

Shrinkage in retail caused by employee actions typically occurs at the point of sale (POS) terminal. There are different ways to manipulate a POS system, such as a cashier giving customers unauthorized discounts, creating fraudulent returns, manually entering values in the system or making a no-sale, which means that the cashier opens the cash counter without registering a sale.

4. Vendor Fraud: The smallest percentage of shrink is vendor fraud. Retailers report vendor fraud occurs most when outside vendors to stock inventory within the store.