Retail profit improvement
There was a common notion that organized retail industry would be the face of the future. Beautifully decorated shopping malls with attractive visual merchandising would lure the customers and shoot up profit. There have been speculations that this is the right time to invest in retail industry to make quick bucks. However, the major challenges that have kept the retail profit improvement at bay are the changing buying habits of customers and shrinkage. Out of the two, the first one refers to shifting shopping habits of consumers from local stores to internet stores. Though not much can be done to attract the customers to walk back to the local shopping mall, being a little creative may help. Now is the time not just to think of avoiding losses but also to improve profits.
People today are more prone to buy the required goods on the internet than drive to the nearest shopping mall or retail store to buy it. The speed, accuracy, ease, attractive offers and discounts are some of the strong reasons for the customers to choose shopping on internet. Internet has no doubt been a biggest blight on retail profit improvement. It is no wonder people today visit stores just to have the feel and touch of the product before they buy it at best price on the internet. Some retail firms have been successful to extent in attracting customers by using some innovative strategies like providing discount coupons to buy the products at stores.
The second reason has no lesser impact on the retail profit improvement as the internet. Pilferage has been considered to be the major reason for shrinkage until recently. However, it has been found recently that in-house thefts, employee errors, security, etc. have been the greater hurdles for retail profit improvement. The following data shows the percentage of loss incurred due to various reasons:
| Customer theft | £1,767 million | (43.5% of all shrinkage)
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| Employee theft | £1,479 million | (36.4% of all shrinkage)
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| Distribution chain theft | £175 million | (4.3% of all shrinkage)
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| Administrative error | £642 million | (15.8% of all shrinkage)
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| Total Shrinkage | £4,063 million | (100.0% of all shrinkage)
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The above is the break up for crime cost to UK retailers for the 12 months period as reported by the Global Retail Theft Barometer. The above figures clearly show that though customer theft resulted in 43.5% shrinkage, employee theft, distribution chain theft and administrative errors amounted to 56.5% of shrinkage which is quite considerable.
Retail profit improvement even further
Further breaking up, it has been found that apart from 21% of shrinkage occurring due to customer related theft, a whopping 79% is due to cashier errors 32%, general employee cause of 24%, 10% receiving and 13% due to damage and error. This clearly shows that more shrinkage occurs as a result of internal causes rather than external ones. However, many retail stores, even today, consider pilferage by the customers to be the major cause for shrinkage which is not true.
Retail profit improvement – increase your chances
In order to increase the possibility of proper retail profit improvement, it is important to manage the shrinkage well. It has also been found that trained employees can reduce shrinkage to a considerable extent. The second measure which can help reduce shrinkage is enhancing security equipment. This also shows that using the latest can result in retail profit improvement. The latest technology available today helps provide sophisticated security at very low prices.
There are several loss prevention firms which can help retail stores to control shrinkage and retail profit improvement. These loss prevention firms with qualified and experienced professionals can help identify the cause of the problem of shrinkage and take appropriate measures to control it.