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VIRTUAL BUSINESS RETAILING 3.0. Chapter 9 security. In this unit we will study the topic of store security We will begin by examining how theft affects a business & how much businesses lose to theft each year We will then study the different types of theft - PowerPoint PPT Presentation
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CHAPTER 9SECURITY
VIRTUAL BUSINESSRETAILING 3.0
In this unit we will study the topic of store security
We will begin by examining how theft affects a business & how much businesses lose to theft each year
We will then study the different types of theftNext we will discuss some methods for loss
preventionLastly we will review mathematics associated
with store security
After completing this lesson you will be able to: Calculate shrinkage based on merchandise book value
& physical inventory counts Give examples of internal & external theft Explain the importance of conducting a physical
inventory in terms of loss prevention Explain how rearranging products in a store can lead
to a decrease in shoplifting Use financial statements to determine expenses
related to security & the impact on profit
How Theft Affects A Business
Protecting a store from inventory loss is a major concern for businessesPro Shoplifter Showing How it is Done [2:57] Theft of inventory causes significant expenses for retailers
The losses caused by theft are referred to as inventory shrinkage Shrinkage is the term used to describe inventory losses
resulting from shoplifting, employee theft, inaccurate paperwork, damaged or misplaced merchandise, & vendor error While administrative inventory losses are not caused by theft,
they do contribute to lost revenue for retailers
How Much Do Businesses Lose to Theft Annually?
Theft places a considerable financial burden on retailers &, ultimately, on the customers who will pay higher prices to account for retailers’ losses It is estimated that U.S. retailers lose over $41
billion/year due to theft Losses from theft ultimately erode profits & can mean
the difference between profit & loss
Shoplifter Caught at Walmart [:21]Crime Inc. – Stealing and it’s Effects (4 Parts) Part 1 [14:31], Part 2 [14:31], Part 3 [14:31], Part 4 [:37]
Determining Shrinkage
Calculated by performing a physical inventory A physical inventory is a count & inspection of all the
merchandise in a store Conducted at regular intervals, usually once or
twice/year Once the inventory count is completed, the value of
the merchandise counted in computed The total is then subtracted from the book value of the
inventory
Book value is the amount of money the inventory is shown to be worth in the business’ records
Shrinkage=the difference between the book value of the merchandise & the inventory value
The normal shrinkage rate for retailers is between 1% & 5% of sales each year
Types of Theft
Retail theft generally falls into two categories: External theft (shoplifting)
Most Blatant Theft? [1:06] Internal theft (employee theft)
External TheftShoplifting is the removal of items from a
store with the intention of not paying for them
Shoplifting and Employee Theft Prevention [1:42]
Professional shoplifters Use sophisticated techniques to accomplish their
thefts Often enter a store knowing exactly what they plan to
steal Experts at concealing merchandise or at passing it to
an accomplice & leaving a store undetected Difficult to spot & catch Deliberately dress & act in a manner that will not
attract attention
Crime Inc. – Stolen Goods [:30]
Organized Retail Crime is $30-Billion Business Nationwide [2:28]
"Organized retail crime," as police call it, has become big business. Last year, theft rings stole an estimated $30 billion worth of retail merchandise that wound up getting sold out of car trunks, online and even to distributors who relay the merchandise back to store shelves.
Shoppers end up bearing the financial brunt, because "it comes back to consumers in the form of higher prices," said Joseph LaRocca, the National Retail Federation's senior adviser of asset protection. Households fork over nearly $400 a year to offset retailers' losses, he said.
Amateur Shoplifters Steal primarily for the excitement or because they are
acting on a dare Often arrive in groups & usually do not have a plan to
steal a specific item Are opportunistic Will take merchandise that can be easily hidden as
they leave the store
Internal TheftAlso called employee theft
Involves the unauthorized taking of merchandise by an employee from an employer
An employee may physically take merchandise from the store or he/she may engage in “sweethearting” – a term that describes discount abuse Involves an employee giving unauthorized discounts
to friends or relativesCosts to retailer: loss of revenue!
Employee theft (the largest cause of shrinkage) accounts for almost ½ of retailers’ inventory shrinkage Most employees are honest & would never steal from
their employer There are dishonest employees who take advantage of
the trust placed in them by their employers
RILA – Retail Crime Prevention Information [6:45]
3 Ways to Reduce Shrinkage in Your Retail Store [9:35]
You can begin to track retail theft in your retail POS solution. The sad story about retail is that around 50% of retail theft can be traced back to employees, not shoplifting, and could go on for months without being noticed.The point I'm trying to make is that you could have a silent partner who is ripping you off on a regular basis right under your nose.To spot this type of behavior quickly, run regular reports from your retail point of sale system and look for unusual trends. Install video surveillance throughout the store and monitor all exits. Employee thieves often hide stolen merchandise in the trash and retrieve it after the store is closed. Reward your honest employees for telling you when they notice someone stealing; you can catch a bad apple before too much damage is done. By following these simple yet effective suggestions, you probably won't completely eliminate retail shrink, but you can keep it to a minimum.
Loss Prevention
Preventing ShopliftingPreventing Shoplifting [3:42]
Preventing Employee TheftPreventing Employee Theft in Your Business [13:12]
Preventing ShopliftingShoplifting losses can be reduced through:
Intelligent store layout Employee education Security devices
Intelligent Store Layout Avoid blind spots Entrances & exits should be visible to all employees Checkout area should have a good view of the store Fitting rooms should be monitored at all times
Employee Education Train to spot shoplifters Training guidelines are available through local law
enforcement agencies Search the Internet for other sources
Security Devices Tags containing ink or an electronic sensor that alerts
employees to tags that have not been removed or deactivated
Installing convex mirrors can help employees see large areas of the store
Hiring uniformed security personnel Closed circuit TV cameras to view the store
(expensive & has to be monitored) Prosecute shoplifters (deterrence) Locked display cases for small or expensive items Height markers near the inside of the front door
Preventing Employee TheftPre-employment screeningStore policiesSecurity devices
Pre-Employment Screening Check & verify both previous employment &
references Required drug testing before hiring
Store Policies Having employees enter & exit the store through 1
designated door or requiring employees to store all bags, packages, & coats in a designated area subject to being checked
Having management approve all returns, refunds, & discounts, & routine checks of the back room & trash bins for hidden merchandise
Can use same security devices to prevent shoplifting or employee theft – if employees know that they are being observed, they are less likely to be tempted to be dishonest
Informative 1 – Retail Theft [8:51]
Key Math Concepts
Compute Shrinkage in DollarsShrinkage is an important problem for
retailers to recognize & controlShrinkage can be computed in dollars or as a
% of salesTo compute shrinkage in dollars, use this
formula:Shrinkage in Dollars=Merchandise Book Value – Physical Inventory Value
Compute Shrinkage as a Percentage of SalesTo compute shrinkage as a percentage of
sales, use this formula:Shrinkage as a Percentage of Sales=(Merchandise Book Value – Physical Inventory Value) / Sales Between Physical
Inventory
Summary
In this unit we learned about store security, how theft affects businesses, & how much businesses lose due to theft
We then studied external & internal theft & how to prevent both
Lastly, we reviewed mathematics associated with store security
The Secret World of Shoplifting – CBC Doc [44:04]