So, the peak Christmas sales season is already upon us! For many retailers, the months of November and December offer the benefit of making a high dollar return on full-priced merchandise, while January provides the best opportunity to clear aged or seasonal inventory. In terms of cash passing through the registers, a retailer’s sales can be expected to rise sharply throughout the peak Christmas period. Along with the bumper sales comes the sobering prospect of increased wastage or stock loss. For retailers, the equation is simple: more stock + more customers = more wastage. The challenge therefore becomes how to limit the loss through the peak sales period onslaught. As always, the answer lies in the retailer’s ability to implement effective processes to minimise the wastage risk. So, what are the factors that will, if not controlled, drive a retailer’s peak sales season wastage through the roof?
- more customers = more external theft/shoplifting
- more stock movement = more breakages
- more transactions = more register exceptions
- more staff = more inexperienced operators (Christmas casuals, for example)
Now that the areas of wastage that can hurt a retailer have been identified, simple, effective process measures can be introduced to marginalise stock loss. Some of these critical measures include:
- wastage expectations
- deterring shoplifters
Preparation (forearmed is forewarned)
If carried out correctly, preparation is by far the most important factor in reducing wastage during the peak sales season. Although year-round wastage control revolves around the dual juggernauts of process and efficiency, there is a third factor which comes into play when the sales onslaught begins in earnest – awareness. Raising loss prevention awareness around the start of the projected sales boom can save retailers a bucket of money, all of which flows directly into the retailer’s bottom line profit. An awareness campaign should involve a significant change around wastage control. This might come in the form of a new loss prevention initiative or could be as simple as revamping and rolling out an existing policy or strategy. Other changes could include new posters around loss prevention/wastage, a loss prevention team talk, a renewed focus on staff/customer bag checks, or a weekly newsletter updating specific areas of loss. Sales staff should also be given the opportunity to comment on what they see as the biggest risk factors in their retail environment. From this feedback, changes can be put into effect to not only limit wastage but also acknowledge staff for their initiative.
Audits are crucial for a number of reasons and they become especially critical during the peak Christmas sales period. At a time when a retailer’s resources are pushed to the limits, information gained from a loss prevention or register health check audit can highlight an underperforming area of the business – from that point, additional resources can be deployed to prevent a potential wastage blowout.
Having an expectation with regards to wastage is essential in mitigating stock loss in the short and longer term. If a retailer fails to communicate effectively what they want to save and where, how are staff supposed to meet its wastage targets? Expectations should start and end with educating employees about what comprises wastage and how it impacts the company’s bottom line. By the same token, sharing seasonal stocktake results will often come as a shock to sales team members, (Gee, we really lost that much?), although employees should not be made to feel overly paranoid about wastage. A sales team sharing the casual attitude along the lines of What’s the big deal, I thought company wastage was covered by insurance (which is untrue), should be avoided at all costs.
If a retailer is looking for a silver bullet to target wastage, this is the one. For those who subscribe to the theory that at least one wastage champion exists within every sales team, then the next logical step would be unearthing and utilising that staff member’s skills to their fullest potential. Extracting key talent usually involves guiding and coaching a less experienced staff member to the point where he develops the confidence to meet and eventually exceed the retailer’s wastage expectations – all this having started from a simple conversation around what the staff member thinks about wastage.
In a period when a retailer should be focused on getting every customer dollar through the registers, shop theft can drive a sales team to distraction. An important point to remember is that while the manager is focused on deterring theft, the resultant drop in productivity will most likely negate any gains from a stock recovery. To put it in plain terms, managers should be focused on driving sales. The most effective way of deterring theft has always been acknowledging customers and providing great customer service – two things a manager should be held accountable for. An important facet in deterring shop theft also involves building a sound relationship with security providers, be that the police or local security services. Furthermore, this task should be spread throughout the sales team. Outside of delivering great customer service, confronting shoplifters is uneconomical and can be downright dangerous. Reporting suspected incidents of theft delivers the correct balance of consequence for the shoplifter and protection with regards to staff safety.
Be prepared to turn a negative into a positive. Unfortunately, there will be times when shoplifters slip the net, getting away with valuable stock. Far from sweeping the incident under the carpet, this presents a fantastic opportunity for retailers to change the team culture. A great example comes from a department store environment – where the sales team from a particular department suffered a shoplifting incident involving a high dollar theft. Following the theft, CCTV footage of the incident was shown to department staff. Dismayed by how easily the thief had managed to steal high value merchandise, from that point onward staff did not allow another theft to occur. For those without access to CCTV, a team talk directly after a theft incident will provide similar deterrent value.
Wrapping up, this article has discussed the trend for wastage to rise sharply during the peak Christmas sales period. To meet the challenge and limit the damage, a variety of waste mitigating ideas have been presented. A common theme in almost every discussion point involves engaging staff to take the initiative in preventing wastage across a number of critical fronts. The article has talked about the benefits of communication and the valid possibility of a wastage champion hiding within every sales team. Also mentioned are the pitfalls surrounding shop theft, and the benefits of turning a short-term negative into a long-term positive.
This leads to the final discussion point: a positive mindset. Building a positive and constructive mindset within a sales team will go a long way in stopping wastage in its destructive tracks. While some retailers shudder at the prospect of how much waste they stand to lose during the peak Christmas trading period, others look upon the same period as an opportunity to deliver substantial savings to their bottom line. Ultimately, it is this positive mindset approach that will drive a retailer’s loss prevention ambitions towards success!
Darren Egan has 15 years of experience in the loss prevention field and is the Loss Prevention and Audit Manager for the Star Retail Group.