The media has been buzzing about Walmart’s efforts to minimize shrinkage. The retail giant is using artificial intelligence (AI)-powered cameras at the checkout at more than 1,000 of its stores as part of an initiative called “Missed Scan Detection.” The smart cameras use an algorithm that detects if items weren’t scanned properly or if shoppers left items in their carts — as well as intentional attempts at fraud and theft.
Retail shrinkage and loss is a widespread problem. The National Retail Federation’s 2019 National Retail Security Survey reports that shrinkage percentages of retailers’ inventory have been holding at about 1.4 percent for the past several years. Overall, this represents billions of dollars of losses for the retail industry. Besides, more retailers are reporting shrinkage rates at the higher end of the spectrum of 3.0 percent and more. In 2014, 6.6 percent of retailers experienced shrinkage at that rate, but last year, that number rose to 10.9 percent of retailers.
Business Insider points out that if Walmart’ U.S.’ business experienced shrinkage at the industry average, it would have meant a loss of $4 billion last year. Walmart has been using its AI cameras for about two years and reports that during that time, it has seen a decrease in shrinkage.
How to Reduce Shrinkage If You Don’t Have Walmart’s Resources
There are other ways besides AI-powered checkout cameras to help minimize the shrinkage rate at your retail business. Here are seven best practices that can help you reduce loss and keep a healthier bottom line:
- Keep eyes on the store: Whether you use security cameras, mirrors, or aisle configurations that don’t create blind spots, you can deter shoplifting by letting people know you’re watching.
- RFID loss prevention: If you sell in-demand, high-ticket items, consider using radio frequency identification (RFID) tags and readers to alert your staff that an item is leaving the store without having the tag removed at checkout.
- Reserve high-risk tasks for managers: Require manager approval for transactions such as returns, voids, no-sale drawer opening, and refunds.
- Hold employees accountable: Stress to employees that they are responsible for having the correct amount in the drawer at the end of the shift.
- Streamline processes: Some shrinkage is the result of administrative error. Consider using an integrated point of sale system (POS system) that shares data with your accounting application or other business systems to eliminate transcription or keying errors.
- Train your staff: Make sure each of your employees understands the security measures and cash handing best practices you have in place and what their role is in keeping your store safe from losses. Written policies and a training program will ensure that even your newest employees are prepared to handle situations that can lead to shrinkage.
- Double-check vendor shipments: Confirm shipments to make sure they match your invoice and that you’re getting what you pay for.
Always Use Best Practices, Even If You Deploy a High-Tech Solution
Technology will continue to advance, giving you new options to curb shrinkage, but using common-sense loss prevention best practices will always make sense. Whatever the size of your store, tech budget, or staff, start with the basics and do all you can to protect your business.
Want to know more about how the right POS system can help you reduce shrinkage? Contact PlazSales.