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Crack down on shrinkage

Running Your Business

Crack down on shrinkage

Keeping track of security and shrinkage in a busy working environment is a tough proposition for community pharmacies, but one that is vital in order to reduce profit losses. The Warman-Freed Pharmacy shares how it has worked to stay on top of this challenging issue

Despite the best-laid plans, every pharmacy at some point in time has to contend with issues around security and shrinkage, something that can place substantial economic strain on a business. Warman-Freed Pharmacy general manager Farah Ali says she and her team face regular challenges around these issues due to the nature of their work.

“Being a retail pharmacy with midnight opening hours and a high level of premium beauty and fragrance products, the potential loss from shrinkage and issues of security is a big challenge,” she says.

“Our late openings also mean there is a reduced level of support at times in the evenings, as other local businesses may be closed and police numbers and activity may be centred elsewhere. Cash and stock losses could be small – £5 a day – which doesn’t seem like much, but over a week or month that is a substantial loss of money.”

Safe and secure

With high-value items such as perfume and beauty products making the pharmacy a potential target for shoplifters, the team at Warman-Freed has put a number of robust measures in place to deter would-be thieves. This includes investing in a CCTV system to monitor shop-floor and back-office activity, placing security stickers on products and keeping high-value items in locked cabinets.

Ms Ali says staff training has also enabled colleagues to safely and effectively identify suspected shoplifting activity, while a suggestion from a colleague also led to an innovative
solution to one particular security issue.

“We had a problem with thieves going behind our counters, so one member of staff suggested putting a chair in the front to act as a barrier, but also use this to carry out mini-makeovers near the beauty counter,” says Ms Ali.

She has also joined a local shop theft awareness social media group and maintains a good relationship with police and traders. She says this has enabled her to gain extra support and advice from local authorities during incidents of shoplifting and theft at the pharmacy, while also allowing her to stay updated on any reported criminal activity in the area.

Taking stock of shrinkage

As well as theft, Ms Ali says there are many other factors that can lead to shrinkage, such as items being damaged or missed on deliveries, pharmacy and OTC items obtained on script being returned for refunds as cash equivalents, and errors occurring while inputting pricing
data, just to name a few.

She adds that reducing shrinkage is a top priority for the entire Warman-Freed team, with each staff member playing a role in monitoring and capturing instances of shrinkage – from cross-checking delivery notes with invoices to making daily cash and till checks to ensure
that losses are kept to a minimum.

“Team engagement and support are needed to ensure that everyone is aware of what constitutes a loss and how to monitor and record it,” says Ms Ali. “Daily and weekly updates, sharing key information and ensuring staff are able to ask questions and suggest ways to minimise losses is also important. A level of awareness and self-drive is important as all the systems and operational set-ups will not be effective if the people are not on board.”

Warman-Freed is also equipped with EPOS and data systems to help the pharmacy team keep track of transactions, stock ordering, pricing and other in-store operations. Ms Ali and her team review these regularly to highlight any discrepancies and determine what impact these have had on the pharmacy’s overall profit and losses.

While all these actions have been successful in reducing security risks and shrinkage at Warman-Freed, Ms Ali stresses it is important for individual pharmacies to develop their own bespoke strategy to tackle these issues.

“Each area and community has its own challenges, so knowing exactly what they are will help towards making a plan specific to you and your team,” she says. “Be realistic about shrinkage, how it can be minimised, and keep the team informed, involved and engaged because, without their support, this will make it difficult to tackle.”

Lessons learned

  • Invest in security measures such as CCTV, front shutters and security tags to act as deterrents to potential shoplifters
  • Work closely with local authorities and shops to identify security risks and keep up to speed with news of criminal activity in your community
  • Give your team responsibilities over monitoring and capturing instances of shrinkage to increase their understanding of where losses occur
  • Use EPOS and data capture systems to help track store transactions and identify any processing and stock count errors
  • An understanding of shrinkage and its impact on the business is key to getting the team to follow processes and get actively involved in reducing losses.
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