Download HOW RETAILERS CAN USE POINT OF SALE

HOW RETAILERS CAN USE POINT OF SALE TECHNOLOGY TO CUT THEFT
Keith and Therese have operated their busy retail business for twenty years. Their
employees are friends. They include the lady who baby sat their kids for years, the lady who
Keith and Therese now know stole more than $200,000 from their business over four years,
the lady who’s actions almost ended their marriage and closed their business.
Employee and customer theft in retail businesses is expensive according to a variety of
international studies. Depending on the size of the retail business, it can range from 2% of
total sales in value to 6%.
While many Point of sale systems can report on the cost of theft, employee and customer,
retailers often prefer to ignore this data as they find it less stressful.
It is only after theft has been uncovered that retailers become engaged and enraged enough
to act. For some this can be too late.
Having worked with many retailers to mitigate the cost of theft, I have prepared basic advice
which, if followed, will reduce the cost off theft in any retail store.
TWELVE STEPS TO CUTTING THEFT IN YOUR RETAIL STORE
1. Only sell what you arrive, bring into the store, through your Point of Sale software.
Selling items which are not tracked creates a considerable risk for the business.
2. Track ALL sales - by scanning, touch screen button or PLU (product look up code), a
hot key on your computer screen.
3. Stop all department sales, sales where the employee gets to enter the amount of the
item. This is an old-school cash register approach which makes it easier for
employees to steal.
4. Scan our ALL product returns and credit claims. This way, everything legitimately
leaving the store is tracked.
5. Undertake regular spot stock takes throughout the business. The discrepancy
between what you have on hand and what is recorded in your Point of Sale system
can reflect theft.
6. Reorder stock using your retail management software. This stops poor buying
decisions. It also identifies stock theft and employee fraud around stock.
7. Implement the use of employee initials, codes or bar codes for every sale. While this
can slow sales, the increased vigilance will reduce theft.
8. Set an end of shift cash balance target and stick to it. A register which does not
balance can be an indicator of employee theft.
9. Change system passwords regularly. Make it a condition of employment that these
passwords are never shared.
10. Do random, during the day, register balance checks. Check that the cash your
computer system thinks should be in the cash drawer is what is actually in the cash
drawer. Employees who teal may build up a reserve of cash in the drawer during the
day, waiting for an opportunity to take out ‘their’ cash.
11. Use your software to check and report on behaviour which could indicate employee
theft. A good Point of Sale system will provide an Audit Log of odd behaviour
including cancelled sales, deleted sales and the like which could indicate employee
fraud.
12. Follow your suspicions regardless. Put your business ahead of friendships.
The cost to any retail business of customer and employee theft can be significantly reduced.
The keys are retail owner and management engagement, full use of the software and
relentless application of a zero tolerance approach.
HOW DO YOU KNOW IF THEFT IS AFFECTING YOUR RETAIL BUSINESS?
Too often, retailers do not find out about theft until the cost to the business is considerable.
In my work with retailers on theft and related challenges, I have developed a sense of
indicators to point to theft being a problem in a retail business.
Three key indicators of theft occurring in a retail business are:
Falling gross profit. Compare your trading gross profit year on year for the whole year or
for quarterly blocks - no less though as retail volatility could make a shorter period
comparison of dubious value. If the gross product of the business - sales less stock
purchases - has fallen more than a few points theft could be a cause. The theft could be
cash or product related.
Tracking gross profit should be done quarterly on a year on year comparison basis to
maintain a regular check on this important theft indication.
If you are not sure what reasonable gross product for your retail business should be, check
with a reputable industry association or with other retailers in your area.
Stock on hand discrepancies. Undertake spot stock takes - count the quantity on hand
and check this against the count held in your POS system. Do this regularly for 100 to 200
items. If you are finding discrepancies in more than 5% of items each count then it is likely
you have a systematic theft problem.
Employees living beyond their means. If you have an employee who starts to obviously
live beyond their means without and reasonable expectation, become suspicions and look
for evidence of theft in your retail business. There may be a good reason and you just do not
know about it. Likewise, it could be due to theft.
Theft indicators abound in a retail business. Be aware of the indicators appropriate to your
business and to establish processes for regularly measuring these against a reasonable
yardstick to see if you are being affected by theft.
Many retailers have tools with which to uncover and address employee and customer theft.
The key is their engagement, or lack thereof, with the facilities in their Point of Sale software.
Acting today and embracing the theft reduction facilities in the software in your business
could protect you from the challenges facing Keith and Therese as they pursue justice
through a legal system and compensation through insurers.
The reality is that Keith and Therese could have stopped the theft much sooner had they
used the facilities in their Point of sale software.
Mark Fletcher is managing Director of Tower Systems. www.towersystems.com.au