Security Lesson 9

Objectives Calculate shrinkage based on merchandise book value and physical inventory counts Give examples of internal and external theft Explain the importance of conducting a physical inventory in terms of loss prevention Explain how rearranging products in a store can lead to a decrease in shoplifting Use financial statements to determine expenses related to security and the impact on profit

How Theft Affects a Business Causes significant expenses for retailers – Referred to as inventory shrinkage Shoplifting, employee theft, inaccurate paperwork, damaged or misplaced merchandise, and vendor error Estimated that U.S. retailers lose over 41 billion dollars a year due to theft – 41,000,000,000

Determining Shrinkage Calculated by performing a physical inventory – Conducted usually once or twice a year

Types of Theft External Theft: – Shoplifting Internal Theft: – Silly Scan – Garbage

Loss Prevention Preventing Shoplifting: – Layout of your store – Employees trained in how to spot shoplifters – Security devices – Locked display cases – Height markers along the door

Preventing Employee Theft: – Check and verify previous employment and references Drug testing – Employees enter and exit through one assigned door – Cameras

Key Math Concepts Compute Shrinkage in Dollars – Shrinkage in Dollars = Merchandise Book Value – Physical Inventory Value Compute Shrinkage as a Percentage of Sales – =(Merchandise Book Value – Physical Inventory Value) / Sales Between Physical Inventories

Math #2 Womens Sportswear: – ($907,340-$875,435)/$1,637,270= – ($31,905)/$1,637,270= –.0195 – 1.95%

Math #3 Quarter = 3 months $875,495*.025= $21,887 / 3 = $7,295.79/mth 11 hours * 7 days/week = 77 hours/week 77 * 4 weeks in a month = 308 hours/month 308 * $7.50 = $2,310 $7, $2,310 = $4, Security System is well worth it!!!!