Retail Loss Detection and Prevention - Policies and Procedures

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

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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.

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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

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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.

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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

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THIS IS WHY IT IS IMPERATIVE THAT LOSS PREVENTION
BECOME A CRITICAL COMPONENT OF BUSINESS
PHILOSOPHY!
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The 5 ps of loss prevention
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Philosophy
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Policies
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Procedures
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Practices
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PeopleTHE HUMAN FACTOREmployee Theft
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10-10-80 Rule
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Understand why some of the 80 fall on the wrong
side of the fence.
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OPPORTUNITY
RATIONALIZATION
PRESSURE
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Thank you !