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How to profit in Retail
How to profit in Retail
The retail sector has been severely affected by the current economic crisis. It is understandable that there is no panic as retailers look for creative ways to survive. A very important weapon in their arsenal, which is commonly ignored but actually made his fortune can change is the issue of reduction of the contraction. While this may seem obvious to many in the industry, many retailers still underestimate the importance of reducing the contraction or have not given the attention it deserves.
A shoplifting World Barometer report shows that in 2008, retailers lost 65 billion pounds of shrinkage accounted for 37% of its net profit margin. In addition, numerous reports of research have reported that a staggering 79% of retail shrinkage problem is directly related to internal activities, only 21% is caused by stealing in stores. Less loss prevention experts conclude that approximately 68% of the contraction is controllable, retailers could have added £ 44000000000 to its net profit margin last year.
Why has the issue of reduction of the contraction has not been given the level of importance it deserves? The answer is twofold. First, the issue of reducing the contraction has traditionally focused on shoplifting, second, providers safety have failed to demonstrate the concept of return on investment (ROI) to retailers.
While there is no argument that the accounts of shoplifting a significant percentage of retail shrinkage, employee theft commonly known as "premium or profit margin" and the lack of proper best practices management have a significant impact on the outcome margins. While the thieves focus on the quantity of merchandise, dishonest employees steal merchandise of great value and poor operating practices at the stores and receiving departments are responsible for damaged goods are not perishable or ceased to be.
The conventional wisdom is that stealing is the main source of problems of retail shrinkage, therefore, retailers spend four times more resources to shoplifting that the internal activities that are, ironically, responsible for the contraction fourfold. For retailers to get more from your loss measures prevention, the emphasis must be shifted to operational issues such as properly vetting new recruits, the redesign of deposits to ensure high-value goods are properly guaranteed, in development of consistent procedures for receipt, using smart technology linking store point of sale and development of a culture of loss prevention among the staff because in the final analysis are the staff members who can make any effective measure or redundant.
reduction of contraction properly thought through, managed and implemented with an appropriate mechanism for measuring retailer can put it back in many benefits. In an industry where competition is fierce and margins are low, reducing the contraction can be a competitive advantage.
About the Author
Romeo Richards is a retail consultant with Richards International Group, a UK based retail consultancy firm.
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