3 Loss Prevention measures retailers should implement over the holidays
The holiday season is upon us. As you get ready to open your stores for Black Friday, Small Business Saturday, and CyberMonday, you should know that your holiday staff may cause you to lose inventory, credibility, and cash. The hit NBC show Good Girls is a funny spin on a not-so-funny problem that is impacting the retail industry. The threat of shrinkage is at an all-time high and can cut into your profits big time. You can no longer think of shrinkage as a cost of doing business.
Shrinkage is a reduction in inventory due to shoplifting, employee theft, vendor fraud, and social engineering hacks. Shrinkage cost retailers more than $49 billion in losses in 2016. This figure has tripled and will continue to increase if retailers do not focus on the source of the problem. This article exposes the 2019 top 3 sources of retail shrinkage and gives you 3 ways to stop loss for your business.
1. Cyber Hackers and Social Engineering
The number one threat to the loss of inventory is a breach of the retailer's cybersecurity. Cybercriminals are levering the stress of the season, long hours, and new holiday staff to hack retailers. In 2018, 50% of retailers experienced data breaches and 90% of those were caused by social engineering attacks on their vulnerable staff. Social engineering is the psychological manipulation of people into performing actions or divulging confidential information.
The Customer is always right?
The customer is always right methodology and social engineering tactics are putting retailers in jeopardy of losing consumer data and inventory. Hackers are social engineering your staff over email, phone, and in person.
Keep your guard up!
The key to ensuring that your staff does not get social engineered is to train them on how to spot these types of attacks and help your staff identify their weaknesses. Hacware has an intelligent automated solution that will train your staff on data protection, security, social engineering, and shows them how to keep their guard up this holiday season. This will allow you to focus on customer satisfaction and sales while Hacware works around the clock to train your staff.
2. Employee Theft
The unfortunate reality is that someone on your team could be planning to make a lot of money for themself this holiday season. According to Shopify's 2018 Loss prevent report, Employee Theft is one of the leading causes of inventory loss for retailers. About 75% of employees have stolen from their employer once and about 38% have stolen at least twice.
If you have unhappy staff with minimal consequences, they could steal from you.
Staff members that typically steal from their company feel wronged by their employer or believe that the employer underpays them for their hard work. These employees do not have a criminal background and are not necessarily prone to stealing. They see the opportunity to steal from their employer as a way to supplement the wrongdoing of their company. The company does not enforce or provide strong consequences for theft, therefore, they allow their greed to cloud their moral compass and steak from the company.
Review your voided or refunded transactions
Employee fraud can go undetected for months before the retailer is aware of inventory loss. Before entering into the holiday season check your transaction logs for suspicious transactions around voids and refunds. Employees will launder money by voiding or refunding transactions and taking the money to pay themself.
Look for Large Giftcards balances
Gift cards are a preferred tool by malicious employees to fly under the radar. In 2014 a southwest airline employee issued himself $200,000 dollars in gift cards. In 2019, an IT manager for a large retailer issued himself 5,000 dollars in gift cards and was caught on video surveillance trying to buy a big-screen TV. Review your transaction logs for a trend in unusually large gift card purchases which could be fraudulent. Often times employees intend to the gift card for themself or resale it to someone else for a lesser value.
To prevent employee theft this holiday season, create an awareness & training program for the holiday staff to learn about identifying other team members that have suspicious behavior and how to report them. The training program should also address the proper policy for issuing gift cards and returning items.
3. Vendor Fraud
The third cause of retail loss is when someone impersonates a vendor to shoplift your inventory. The common impersonations are delivery companies like UPS or Budwiser.
And as you guessed... The best and most affordable solution to provide awareness and training to your staff. Train your employees on how to identify valid vendors and instruct them on the proper questions to ask vendors. Your people are your first line of defense to protect your business from vendor fraud.
It is important to be aware of the risks that could impact your bottom line and address them head-on. This guide is to prepare you to have a profitable holiday season. Feel free to contact us if you need more information about the Hacware insider awareness product. Happy Holidays!