Sunday, March 11, 2012

Customer Theft

“Bankruptcy stared me in the face, but one thought kept me calm: soon I'd be too poor to need an anti-theft alarm.” ~Gina Rothfels

Being a university town, backpacks are a common sight around Tallahassee, given the number of students. The proliferation of book bags and their potential for making theft easier have given rise to a variety of "backpack" policies at the stores that cater to students.

Most have signs posted saying you must either leave your backpack on a shelf at the front of the store or be subject to a search.

While these kinds of policies have become pretty widespread, one retailer took it to the extreme. Not only does he ban backpacks and book bags, but he has also disallowed purses. When I questioned him about this policy, he said that he has never had a complaint in the three years since he posted the notice.

He may not have received a complaint, but on my visit, I watched a bunch of potential customers come to the front door only to turn around and leave when they saw the sign.

Now, understandably, every business wants to keep theft to a minimum, but overly tight restrictions can stifle business by turning away potential customers. It is questionable that the value this practice adds by protecting inventory is worth the lost business. As an aside, it is worth noting that the majority of theft is not committed by customers, but by employees.

Unfortunately, theft is a given. No matter what theft deterrent system you impose, you will never be able to abolish it completely, and you really need to be aware of the affect your restrictions are having on your customers.

I can choose to have sales of $500,000 with $10,000 in theft loss, or I can impose overly restrictive policies that drive away a percentage of my customers and bring in $100,000 in sales with no theft. Obviously, the first scenario would be preferable as the bottom line is much higher, even with the theft loss.

I have seen entrepreneurs take theft personally, feeling as though the thieves are purposely trying to hurt them. Others let their egos get involved and they lose all objectivity. It goes without saying that no one likes theft, but retailers need to accept that a certain amount just comes with the territory.

Having some measure of prevention to reduce the incidence of theft is important, but it is also important to understand that the cost of totally eliminating theft is just too high, both in terms of additional equipment and lost sales. Rather than focusing on eradicating it completely, you need to do a cost/benefit analysis to ascertain whether the benefit of prevention outweighs the cost.

Now go out and evaluate your theft policy. It should not be so restrictive that it discourages customers from coming in. Neither should it be too lax that it encourages theft.

You can do this!

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