Since it includes employee, customer and vendor theft (all forms of internal and external theft), misplaced inventory, mis-shipped inventory, faulty inventory control, damaged inventory, etc... it's not that easy to calculate the parts of the sum, let alone reduce total retail shrinkage.
As one definition is “intended sales income that was not and cannot be realized,” I guess one could also inlude buyer's errors and resulting unsold inventory and pricing errors. It's huge.
It has been awhile since I've been retail, but....
Many employees, especially kids, don't realize that anything less than zero tolerance is a slippery slope. That you have a zero-tolerance policy and that there is a reason that a missing, damaged or stolen item can dramatically affect the store is a good first step. They won't know if you don't tell them.
Training on process; inventory control (and make sure it is efficient) is likely your next step. Missing inventory can equal a lost sale and lost customer, which can be materially worse than a stolen item that you know is missing.
Examples: Inventory checks. Bag checks. Supervisor spot checking cash drawers and receipts. The point is to make enforcement *visible*. If you find a violation, enforce the policy (call the cops, fire the employee, etc). Even if you don't find one, people will notice that you're not asleep at the wheel. Part of it is fear of getting caught, but another part is that you *care*.
What you've described sounds like a very broad problem. Here are some things to consider:
1. All inventory purchases should be made on PO.
2. All inventory shipments received need to be open, counted, matched to the PO. We like to call this the "receiving process". If there are differences, the vendor needs to be contacted immediately to notify them what was ordered did not arrive.
3. In store cycle counts should be performed regularly and discrepancies reported and monitored.
4. The purchase order system should have record of the vendor pricing. If it changes too often to keep track of you need to add some category managers who are responsible for approving the price lists, and you need to add a person or two to update the pricing as often as needed.
5. Instead of focusing on the detail of the PO pricing, go talk to your AP clerks who handle the orders from your suppliers, and ask them how much time they spend re-keying PO's before they can match the pricing to the Vendor Invoice. Yes, that's right, your AP clerks may be facilitating some of this fraud by innocently recoding the PO's so the Invoices match for payment because someone told them not to rock the boat. Here is where you start looking for director level kick back schemes.
If there is no control over pricing and receiving, then you have no chance of improving the process.
If you have a warehouse, then you need to be sure the people are carrying out their internal controls.
Get some security cams at the dock area. You will be looking for higher end products to be walking out the door at odd times.
All crates of high end goods must be broken open and counted. If you don't count you can't complain.
About half your trouble will go away with proper receiving procedures.
Another 30 - 50% you will eliminate with control over price lists for POs.
I agree with all that Valerie had to say. Also, the little things like lights, mirrors, cams, clear floor space, locked access to receiving, clear controls over returns and check out location items not purchased can help.
