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| 1/3 of business go bankrupt due to shrinkage |
Yes this happened to me and unfortunately this is something that can happen to you and your business especially if you are not fully aware of the devastating impact of retail loss and do not have a proactive loss prevention strategy in place. According to the Certified Fraud Examiners approximately 1/3 of all bankruptcies are due to internal and external theft.
This is how I became one of those theft statistics.
In 1989 a store I owned called "Malibu Records and Gifts" was forced to close its doors forever. Three years earlier my partners and I were extremely excited about opening a new business that sold a wide selection of unique gifts and music cassette tapes. This was a time when a cassette tape was how music was played just prior to the CD revolution.
My partners and I were young, full of energy and full of spectacular dreams. Our plan was to eventually open a chain of stores across the region. So when the news came that our company was in a financial crisis we were all in a state of shock. We were even more shocked when we discovered the main reason for the crisis was due to shrinkage. In a span of less than three years almost a quarter of our stock had gone missing. I am still not certain whether the losses were due to internal or external theft but I could only presume that it was a combination of both. Three years of hard work and an investment of tens of thousands of dollars our dreams were shattered and our company was going out of business despite the fact that sales were generally good.
Although this incident occurred almost 25 years ago I still remember some of the anger and frustration I felt at that time. I was angry at myself for not being more vigilant as well as angry at those people who stole from us. As I look back now I am really not that surprised at the course of events that had occurred.
Being highly inexperienced we did not keep strict inventory controls. Had we, perhaps we would have been alerted to the problem much sooner.
We did not conduct background checks on our employees. Had we, perhaps we would have weeded out some of the potential problem employees.
We did not have much in the form of loss prevention. Had we, perhaps we would have stopped at least some of the theft. There were so many areas that we had taken for granted. Although we were somewhat aware that our retail industry generally had a high shoplifting rate, we didn't think this could happen to us especially since our products were protected, or at least so we thought. Each individual cassette tape was protected by an oversized security case.
Now here is how it was supposed to work. The customer would take the security case with the enclosed cassette tape to the cashier who would use a special "key-like" tool to remove the tape from the security case. The customer then would pay for the item and the transaction would be complete.
Unfortunately this is how often it actually ended up. Shoplifters would simply steal the protective security case including the cassette tape. Then once outside of the store they would use a set of pliers or a large screw driver to pop the cassette out of the security device.
Another area that we lacked was Loss Prevention training. Had we, along with our entire staff been involved in even some basic shoplifting prevention training there is a good chance we would have been more aware and alert if and when a shoplifting incident was about to occur. Perhaps we would have learned how to better reduce at least some of the theft occurring within the store instead of becoming labeled as an easy shoplifting target.
Although this was an expensive lesson, it did make me more aware that we were not alone and every year tens of thousands of businesses go under do to shoplifting and employee theft. Most business owners work too hard to have profits walking out their door and often a few simple preventative steps can help protect those profits and perhaps protect the business from shutting its doors.
After losing a business to shoplifting and two years later being a victim to a shoplifting assault FJ Tarasoff made a commitment that he would help retailers protect their assets as well as the safety of all staff members. Twenty years later, Tarasoff is a leading authority in retail loss prevention, he conducts training workshops on various loss prevention techniques, including shoplifting and intenal theft and is the developer of “The Shoplifting Prevention Program” an affordable online training program. He has also been interviewed by numerous media outlets including, The CBC, The Globe and Mail, Small Business report, Hardware Magazine, Grocer Magazine, GlobeandMail.Com, Canadian Retailer and is a member of Retail Loss Prevention professionals Group, Security and Loss Prevention for Retail Industry and the UK Loss Prevention Group.
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