Loss Prevention" is not a very glamorous part of retail. It is, however, an extremely important element of the success equation. Call it what you will, theft or shrinkage is all lost dollars ... and each one of these dollars would otherwise be 100% pure bottom-line profit.

A storeowner with annual sales of $400,000 and an average 3% shrink is losing $12,000 from his or her pocket each and every year. In most cases, if true figures were available, it would likely be twice that amount. Shrink is hard to track and most retailers grossly underestimate their loss rates. Any inroads you can make in reducing these losses is money in the bank.

In the last 10 years, employee theft has almost equaled customer losses as the greatest cause of shrinkage. Paperwork errors remain a distant third. There are a hundred ways for staff to steal and it's economically impractical to cover all the bases.

Therefore, the general approach in loss prevention circles is to create the impression that management is aware of all the ways to steal and has checks in place to catch any offenders. In reality, this is not the case, but we hope that the likelihood of apprehension prevents most employees from even trying and keeps them focused on their jobs.

The primary control factor in reducing shortages is management involvement. Only when all levels of management participate in loss prevention programs will shrink gain the necessary visibility as a major company problem. Employees will then realize that the organization is not willing to accept such losses and will understand the importance of proper controls.