3 Ways To Prevent Theft For Small Retailers

Nov 25, 2015 | Weekly Articles

Theft has always been one of the biggest obstacles for small retailers. Whether it be from employees, business partners, or customers, theft is one of the largest contributors to shrinkage.

The saddest fact is that small retailers feel the theft greater than the giant chains, but most owners do not have any type of software to detect theft or prevent it.

Below is a graph made from software advice, where they conducted a survey into the prevention methods small merchants take against theft.
As it shows, most mom and pop stores rely on paper and pen predominantly to track theft. Such measures, are subjected to error, and are not an accurate reflection of what has or has not been lost.

So how do small retailers combat theft?

Get Point-of-Sale tracking software

This will be more expensive than just pen and paper, but it is significantly going to make you more money in the long run by preventing theft.

It may cost you some upfront change, since tracking software is usually an additional cost with Point-of-Sale providers, but theft is costing your business far more.

If you think isn’t happening, you’re going to have to face hard truth.

“The National Retail Federation released figures centering on shrink and the impact on U.S. retailers. Based on research of Richard Hollinger, professor of criminology of the University of Florida, the report found: Shrinkage cost the retail industry $37.14 billion in 2013, or 1.58% of total retail industry sales. Shrinkage is divided into employee theft (43.7%), shoplifting (32.6%), administrative error (12.9%) and vendor fraud (5.4%). The remaining shrinkage resulted from unknown causes. Companies indicated that 18.7% of employee theft involved collusion between internal and external sources” (

Just because you don’t see it on your pen and paper, doesn’t mean it’s not happening.

Softwareadvice also found that 37% of “mom and pop” stores using inventory software, versus 53 percent of local and regional retail chains and 85 percent of national retail chains surveyed.

Be aware of what’s going on with your store.

Check your bank deposits

If you’re just looking to see if the deposit numbers match the sale numbers, chances are you’re missing money. Use online banking to check to see how frequently deposits are made.

For example, if you normally deposit around the same number every day, and then suddenly it switches to every other day deposits, look into that. It could be nothing, but it could also be a sign of theft.

Banks don’t normally notice small changes in deposits, so it’s up to you to track how frequent your deposits are. Take advantage of online banking, and invest time in accounting software to help track your sales and money.

Be aware of employee error

Having inventory management software is only the beginning to prevent theft. You need to make sure your employees know how to use the software correctly.

As listed in the study above, 12.9% of shrinkage is due to administrative error, such as improper documentation of your merchandise. Your employees may not know they need to scan all the inventory and count it. If they don’t report that there’s 3 plugs because they haven’t been trained to use the barcode scanner, then it’s a training problem.

Make sure your employees know how to use your Point-of-Sale system correctly, and track everything. Most employees don’t understand how to correctly use a POS, and it’s something that only comes with training.

Set expectations, and check in to make sure inventory tracking is actually being done.

Want the best Point-of-Sale technology to help prevent shrinkage?

If you’d like to learn more about what technologies steps to take with your own business, or would like a free demo, contact us here.

Start your journey towards success

Our team of POS experts will help you find a solution perfectly tailored to your needs.