Protect Profits Via Loss Prevention

Crack the Code workshop covers ways to “plug up the holes,” especially with tobacco shrink.

November 19, 2020

By Pat Pape

ALEXANDRIA, Va.—Resolving convenience store shortage problems starts with the hiring process, according to Mark Wells, president of LJT Management, a California-based consultancy for the convenience and fuel retailing industries.

Speaking to store owners and operators during the NACS Crack the Code Experience, Wells told his audience that “successful companies have consistent processes in place for recruiting, selecting, training, developing and managing employees.”

Train them well, make them responsible for their shifts and “put the perception in their minds that you are watching, listening and managing your business,” he advised during the “Protecting Profits Through Loss Prevention” session.

Another important way to curtail shortage is to count critical inventory items, such as cigarettes or lottery, every day. Losing expensive merchandise adds up quickly. For example, if three packs of cigarettes disappear from your store in one day, you would need to sell about 19 packs of cigarettes just to break even, he said.

Wells has a system to make counting cigarette packs quick and efficient. It starts with the way packs are stored in the cigarette rack. Load from the back to the front (or top to the bottom based on the type of display). Every fifth pack should be turned backward or marked in some way. One of Wells’ clients puts paint sample cards from the hardware store at every fifth pack. This way you can quickly count your inventory by fives. Each carton is counted as 10.

Wells suggests using Excel to create a diagram of your cigarette rack or even drawing your rack on a piece of paper. The first employee in the morning counts the merchandise, producing an “opening count” and records that figure on the paper. Any cigarette deliveries during the day are counted and “added” to the original number. At the end of the day, the employee on duty makes a third count and subtracts that from the earlier total, which is then compared to the daily POS results.

“It will take about 30 days to get people trained to use the system,” Wells said. “What you’re looking for is a pattern or a large discrepancy.”

In addition to keeping a close eye on inventory, make unannounced visits to your business and conduct periodic cash audits. Use a security camera system and a mystery shopper program, practice proper vendor check-in procedures and communicate your zero-shrink tolerance policy to staffers. Invest in automated cash management technology, such as safes, change systems and backoffice systems that provide reliable information about your operation, he said.

Retailers work hard to attract more customers and sell more merchandise, but according to Wells, they can often generate additional revenue by simply tackling shortage and “plugging up the holes.”

The NACS Crack the Code Experience, which runs through Dec. 4, recognizes that theft and shortage are major problems for retailers. But many don’t even report theft since police often won’t come to stores or make arrests for thefts below a certain amount. Don’t miss the education session “Preventing and Deterring Theft” on November 23, with an encore on Nov. 25, for ways to identify and lower instances of theft while keeping employees safe. Register now and get access to these sessions, along with 50+ education sessions, virtual showrooms and online networking within the convenience and fuel retailing industries.

Pat Pape worked in the convenience store industry for more than 20 years before becoming a full-time writer. She writes for NACS Daily and NACS Magazine.