12 tips to conrol shrink and cash shortages on your front end

First off, you will hear time after time that your people are not your friends, or that being a manager is not a popularity contest.  You will also hear many managers swear up and down that their employees are not thieves.   As usual the truth lies somewhere in the middle.  To borrow from the “Great Communicator” Ronald Regan I like to utilize his “Trust but Verify” method of management.  In this blog you will see time and again follow up, follow up, follow up.   Follow up may well be the most important thing that you do.  However, the optimum results are somewhere in the middle.  You cannot operate with an attitude that all of your people are thieves, yet given the opportunity some of them will rob you blind.  What do you do?   You take away the opportunity, set ground rules and enforce them and follow up on them and they will not have the opportunity to steal.

1.       Cash Drops— in an effort to defuse thoughts that this is about all of your thieving employees and acknowledge that yes some of your theft is going to come from the outside.  Every company that I have worked for has a cash drop policy.  Cash drops are where usually a manager and another employee will sweep through the registers and remove all of the excess cash from the tills and take it to the safe.  Why?  This is so when Bubba Q. Crack-smoker comes through the register buying his new butane torch and he gives you the last $2.99 in his pocket he doesn’t look down and see a register drawer bulging with money.  The goal here is one of eliminating temptation or opportunity.  The manager is taking the drawers back down to their starting level to give the appearance when you look at the drawer that there is little cash there.  By moving money to the safe a smart thief will know that you have more than what is in the drawer, but it will take longer to get to exposing them to greater risk and reducing the attractiveness of you as a target. The added benefit to this is that it will usually cut down on the time it takes to count down a cashier at the end of their shift and if you are making deposits out of the drops then it will reduce the amount of time that it takes to assemble the deposit.

2.       No calculators at the front—Calculators are often used by cashiers who are short changing customers.  During their shift as they short change customers they keep track of the amount on the calculator to ensure that they remove the proper amount of money from the drawer at the end of their shift so they can get their “earnings” and the drawer will balance.

3.       No change on the drawers outside the registers—this is another method used by cashiers to keep track of the money that they have short changed customers.  Usually the method used is one penny per dollar.  So a penny and a nickel on the side of the register will mean the cashier has short changed customers $6.00 and will remove that at the end of the shift.

4.       No extra receipts lying around—receipts left by customers are a goldmine for a key carrying thief.  A receipt gives a fraudulent return credibility.  Often thieves will horde these to allow them to age a day or two and to wait for the opportunity to do the return.

5.       No phone book—this one is tough for a lot of people, employee’s managers, and customers alike will ask for a phone book, the simple truth is a phone book at the front is often used to cultivate addresses and phone numbers for fraudulent returns.  It is not worth it to have this “resource” available to would be thieves.

6.       No cell phone—Cell phones are a distraction for any reason.  Your employees should not be using cell phones in any capacity while they are on the clock unless they are on break in a designated area.  For the purposes of this post, most modern cell phones have the calculator function and can help the cashier to add up the total of the short changing they have done.

7.       No pile of change in the extra change spot in the drawer—a variation on the change by the register method of keeping track of short changing.  I had a problem with this personally when I get on register because as a manager I am usually there because the Shriner bus unloaded and they are all checking out at the same time.  In short I’m in a hurry.  I will ring and when customers give exact change just dump it in the extra change spot so I can quickly shut the drawer and start on the next customer, rather than spending a minute sorting the $.98 all out to the correct bins.  I guess the moral here is that one needs to practice what they preach.  Something I need to work on.

8.       No extra bar codes around the registers—one of my favorite AP videos that I was shown at a training session involved a cashier who had attached a $.25 candy ticket to the inside of her watch band so when she picked up each piece of merchandise and “Scanned” it.  She appeared to anyone who was looking including CCTV that she was scanning all of the customer’s purchases.  In reality she was scanning the $.25 tag every time!  What should have been a $400.00 transaction was like $10.00.  This was an example of sweet hearting at its finest.

9.       Management supervision on the front—this is one that we all buck at some time or another.  Management, being management out of the store and above you decrees that there will always be a manager on the front.  Yeah you have 10,000 things to do, and there are never enough hours to get them done, but the reality is that the single best way to deter theft on your front end is to stand there and watch them.  Look at your larger big box retailers they have a CSS, CSM, or front end manager type whose job it is to do this.  Witnesses will deter theft.  This is something that you need to soul search within yourself and make a decision based on what is going on in your store.  A former district manager of mine spent all say every day at the front end from open to close to monitor front end functions.  Too much you say?  He all but eliminated shrink and in about an eight or nine year period moved from store manager to regional director.  As with most management decisions you have to make choices and prioritize the needs of your location.  He was in a very high shrink location and had been called in to clean it up.  He did and that was what he did to do it.

10.   CCTV coverage—if you are lucky enough to have CCTV (Closed Circuit Television or Video surveillance equipment) in your operation this is a huge asset.  Any time that you think that you have a questionable activity that is or might be happening then you can utilize the CCTV tapes (Well now they tend to be digital and much higher quality) you can frame by frame analyze what is happening in that image.  It is also good to review tapes once a week.  The best method is to look in reports your store will have for all of the non sale transactions as well as discounted transactions (If your store does a great deal of % off transactions this could be too time intensive.)  Using these transaction logs can help you to narrow down transactions where nefarious activity is most likely to happen.

 WAR STORY ALERT!!!  Within a week of my starting my first Store manager job we busted a ring of ten thieves in my store.  I came out of the merchandising end of the business as opposed to operations, but thankfully my DM when I was an assistant had a ground breaking view (In that company at that time) that merchants should also dig into the books.   My behavior reflected my roots and normally I would work with the stock crew from 4 a.m. until noon when they went home, then I would take a “break” by working on my ledgers, verifying markdowns etc.  Having had too many Diet Cokes that morning I had to make a restroom run.  My office was in the front of the store and the restroom was in the back.  On the way back I passed two of my stockers who had done some shopping after their shift and they had a mounded buggy of merchandise.  I remember to this day seeing a comforter set and a cookware set.  I did my business and came right back to the front of the store, maybe an elapsed time of 3 minutes since I had seen the two with the buggy in the back aisles of the store. (Sorry mom, I didn’t wash my hands that time, my sixth sense had kicked in)  My shopping stockers were already gone!  I knew there was no way that they could have checked out so quickly.    After checking at the front as if I was innocently checking to see if they had left yet I went back to my office where the CCTV unit was and saw them pay for one item (of course making sure that they got their employee discount!) and push a loaded buggy out the door un paid for!  No wonder the store’s shrink had been so high before I got there!  I had an in store AP guy who had been making rounds of the store when they “Checked out” so I informed him of what was going down and yanked the journal from the register and the employee discount log so they wouldn’t “disappear”.  WE busted an eventual 10 employees.  Yeah I was a little short for a while, but the existing employees knew I cared and new employees were the additions to make the team stronger.

11.   Void Key—some retailers allow cahiers to have the ability to void the last item that they rang up.  With this capacity a cashier will ring up the most expensive item that the person bought last.  Usually a register will provide the cashier with a running total on the purchase so after ringing the last item and making sure that the customer is paying in cash, they will tell the customer the total of the sale.  While the customer is digging out the cash the cashier will void the last item and later take the cash.  They have just pulled a double whammy.  You have incurred shrink because merchandise left that was not paid for and you have a cashier who has stolen money.

12.   Bob & Lisa (Okay so you really get 13 tips)—Bob and Lisa are acronyms for Bottom of Basket and Look in Side Always.  Taking the focus off of thieving employees we wrap it up here with a look once again at thieving “customers”.  B.O.B. addresses the fact that both cashiers AND customers often forget about merchandise that has been placed under the bottom of the basket.  Make sure that as part of your cashier’s best practices is that they know to look under the basket to see if anything is there.  To help with this some retailers will mount wide angle mirrors across on the next cashier booth to help cashiers see under without falling over the counter.  Cashiers need to be especially cognizant of situations where ad flyers are lining the bottom of the basket to obstruct view.  With L.I.S.A. a common tactic of shoplifters is to pick a large inexpensive item.  They remove the original item and refill the box with smaller more expensive items.  Or taking something like a cooler or luggage and filling it up with other merchandise.  They pay a few dollars to buy the container but can potentially be getting thousands in merchandise.  Cashiers need to be trained to look in poorly sealed boxes to “Make sure everything is there” and coolers, storage plastics, trash cans, and luggage type items to make sure that “Nobody else put anything in there.”  In this manner the cashiers can check to make sure that everything is alright and no additional merchandise is going out the door.

Hopefully these tactics can help you to better manage the shrink on your front end.  With training to yourself, your managers and to your staff, these can be implemented and with follow up will become habit.  In no time you will be turning in shrink numbers that are the envy of the company and your cash shortage issues will all but disappear.