Five finger discount hurts the bottom line
By: Ryal Curtis, email@example.com, 803-777-6491
Retailers have to sell $3,000 to $4,000 in merchandise just to make up for the loss of one stolen shopping cart. About $100 covers the loss of a single candy bar.
Theft falls into a category known in the retail industry as shrinkage. This covers everything that reduces inventory such as shoplifting, employee theft, paperwork errors and supplier fraud. Shrinkage is a key business challenge for today’s retailers. It’s also, for the first time, a subject being discussed by University of South Carolina students enrolled in a new course on loss prevention in the retail industry.
“It may be the only university course of its kind, nationally,” said Karen Edwards, a USC retailing professor.
Edwards said loss prevention courses are usually taught in university criminal justice or distance education programs. But by offering it as a retail course, Edwards said USC students will be able to take their learning in loss prevention directly to a career track in retail management.
“We are extremely excited about this new loss prevention course, and Ms. Edwards is the perfect person to teach this course,” said Jason Carpenter, retailing department chair.
Before joining USC in 2006, Edwards spent several years working for Belk as a merchandise coordinator, human resources manager and corporate trainer. She’s also a licensed attorney.
Edwards developed the graduate-level courses “Law for Retailers” and “Fashion and the Law,” which teaches students industry-specific legal problems and introduces them to federal and state laws that govern retailers and fashion-industry professionals.
Shrinkage…a big problem
“Shrinkage is no small problem,” Edwards said. “I keep telling this to our students and I think it’s starting to sink in when they see the numbers.”
The National Retail Security Survey, a retail industry blog, reports that U.S. retailers lost more than $35 billion to theft in a recent one-year period. It reported overall retail shrinkage increasing from 1.44 percent to 1.58 percent of total retail sales (some shrinkage databases show this number as high as 2.18 percent). Total lost dollars in that same one-year period increased from $33.49 billion to over $37 billion.
Employee theft continues to be the highest contribution to retail shrinkage, accounting for more than 43 percent of all dollars lost.
Shrinkage at Belk
Bernard Brown, director of loss prevention for Belk Inc.’s Southern Division, recently spoke to students in the inaugural loss prevention class.
Brown told the students, “I’m the guy they call when there’s a fire.”
And fires of this kind are a big deal for Belk. With more than 300 stores in 16 states, Belk is the largest privately owned retailer in the United States. Brown said Belk reported more than 15,000 instances of external and internal theft in 2011 – that’s nearly $4 million in stolen merchandise.
“I’m excited to see this class take off at the University of South Carolina,” Brown said. “Understanding shrinkage problems and future challenges for loss prevention are going to put these retail students at a real advantage in the workforce. Simply put, shrinkage impacts a company’s bottom line. For big retailers, that can mean millions of dollars, annually.”
Fourth-year retailing student Tali Elia said this course is exactly what she has been looking for to prepare for her career after graduation. Her father owns a set of retail stores in Myrtle Beach, S.C., and theft has been a major problem, especially during the down economy. Elia plans to go into the family business when she graduates in December and plans to take on the fight against retail shrinkage.
“My dad’s business is a surf shop and surf shops are pretty notorious for retail theft,” said Elia. “This course, and hearing from industry leaders like Mr. Brown, is just what I need to be learning right now. This is an education that I’ll be able to apply day one.”
Several more retail industry guest speakers are scheduled this semester to talk with students in the loss prevention class.
“It will give them a glimpse into how these losses will impact them as future retail managers,” Edwards said. “This course and speakers like Mr. Brown also show our students how the field of retail loss prevention offers career options in addition to the traditional retail management roles.”