By Derek Rodner, VP, Product Strategy, Agilence
The holiday season is upon us again. As retailers stock their shelves and hire extra help, they need to consider the fraud and operational errors taking a big cut at their profit margins. Here are a few quick loss prevention tips that can save retailers substantial dollars this holiday season:
1. Ensure Proper Training
Most retailers hire temporary associates during the holiday season to help with the extra demand. Not only do temporary associates lack a commitment to the company, but they are also more likely to unknowingly make costly errors, such as improperly scanning promotional coupons or not adhering to return policies. And if one cashier is making a certain mistake, then it is likely that all are making the same mistake repeatedly each day — meaning that each small loss very quickly adds to substantial losses for the entire chain.
2. Coupon Fraud
During the holiday season, retailers distribute a significantly greater number of coupons. With this comes an increase in coupon fraud — an issue costing retailers and consumers $500 million a year. Train employees on which tips to be on the look out for, such as “free” and “high dollar” coupons. See the Coupon Information Corporation for more information on counterfeit coupons.
3. Credit Card Fraud
Watch out for cloned credit cards. One easy tip is to match the last four digits of the credit card to the last four on the receipt each time that large purchases of gift cards or high value items are purchased. Also, cashiers should never manually enter a credit card into the system. While most companies prohibit this as a general practice, the message needs to be reinforced with seasonal employees.
4. Customer and Employee Refund Fraud
According to the National Retail Federation (NRF), return fraud and abuse costs the retail industry an estimated $10 billion to $15 billion each year. A large percentage of this loss occurs during the holiday season. Retail managers should reinforce the refund policy with all cashiers and pay close attention to customers who are returning high value products without receipts. To highlight the damage just one person can do, consider this: In one case of customer return fraud, a woman repeatedly walked into 27 of a chain’s 133 stores, picked up an item from the shelves and “returned” it without a receipt. She admitted to over $10,000 in return theft over the course of 90 days. Pay close attention to returns that exceed a certain value, are processed at a particular time of day, or take place without a receipt present.
5. Scan Every Item
With the holiday comes a spike in Organized Retail Crime (ORC). A common trick is the switching or covering of an SKU with a different SKU number of a lower value. Typically, the consumer switches just one SKU and leaves the other identical items in the cart. He then hands the product with the false SKU to the cashier, who proceeds to scan the lower value several times rather than scan each of the other identical items separately. Train cashiers to scan every item in the cart, which also ensures an accurate inventory list for the business.
6. Look for Hidden Items in the Cart
Ask for sales circulars in the cart, which can easily conceal DVDs, makeup and over-the-counter medications. Also ask the customer if they have any large items in the cart that need to be rung up. This ensures that all items are properly entered into the order and that the customer cannot complete the transaction without paying for all of the products.
7. Protect High Value Products
Most consumers buy high value items such as televisions and DVD players during the holiday season. Many retailers who typically do not carry these products, such as grocers, will temporarily sell these goods to increase sales. Display these products in full view of store associates, but also situate them far enough from the door to prevent easy “grab-and-go” shoplifting. Additionally, since these products are target for theft, stock only one or two at a time on the shelf or store floor.
8. Keep a Close Eye on the Self-Check-Out (SCO) Area
Always maintain labor resources at the SCO — this area is known for causing significant losses both intentionally and unintentionally by shoppers. Most losses at the SCO occur when the podium clerk is not present. In many of these transactions, frustrated customers who need help from the absent clerk leave the orders behind, and many others simply leave with the orders, thereby committing “soft shoplifting.”
Derek Rodner is VP of Product Strategy at Agilence, a loss prevention technology provider for retailers. Prior to joining Agilence, he served as Vice President of Marketing at PERFMAN, a cross-platform systems management software provider. Rodner also served in senior marketing positions at EnterpriseDB Corporation and Unisys Corporation, where he delivered open source solutions to enterprise clients. Rodner was the first non-employee Chairman of the Marketing Board for the Open Source Development Labs (OSDL), a non-profit organization now part of The Linux Foundation.