Four Sources of Shrinkage

Shrinkage is defined as loss of products between manufacturer and point of sale. The national average of shrinkage has been estimated anywhere between 2% and 12% of sales. So how does this shrinkage happen, and what can a retail owner do about it?

1. Employee Theft- No one likes to think that this is happening in their business. After all, why would I hire someone I don’t trust, right? Well, the truth is that it happens in almost every retail business, and is the #1 source of shrinkage. This includes discount abuse, refund abuse, even credit card abuse.
– How can a POS system help? With a robust Point of Sale and Inventory Control System like CounterPoint SQL, you can have the checks and balances in place to identify these discrepancies before they affect your margin.

2. Shoplifting- Coming in a close second is shoplifting. Methods include concealment, altering or swapping price tags or transfer of containers.
– How can a POS system help? CounterPoint SQL uses the combination of a bar-code management system and item images within Point of Sale that would alert a clerk of bar-codes being switched. The software also has validated returns, which match returned items to the original ticket kept in Sales History.

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.
– How can a POS system help? Pre-built pricing rules and layers of inventory checking processes are built into CounterPoint SQL that will allow you to reduce these errors significantly.

4. Vendor Fraud – The smallest percentage of shrink is vendor fraud. This occurs when vendors deliver or stock incorrect amounts of inventory, or bill for products not provided.
– How can a POS system help? Vendor Management is accomplished through multiple reports and direct integration with your accounting software so that you are only paying for product you have received.

So stop the bleeding! Call CCS today to schedule a consultation to discuss where your shrinkage may be occurring, and how we can help curb those losses.

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