Christmas is undoubtedly one of the most important and potentially profitable times of the year for any retailer. In order to take full advantage of the opportunities that arise, it’s vital that you not only sell lots of stock, but also maximise the amount of margin you make on every single item.
If there’s one thing that can dent margin, it is stock loss. Unfortunately for retailers, it’s increasingly common at this time of year and can take a significant chunk of your profit.
Let’s look at what you need to be cutting out at this time of year…
Shoplifting
Shoplifting cost UK retailers a staggering £613 million last year, with more than 750,000 incidents of in-store theft reported (that’s more than one every minute!). These figures represent the highest levels since records began with the average cost per incident also rising to £325, and although less of us have hit the high street during the pandemic, this is still a key area to focus on if you’ve got physical stores.
Employee Theft
Unfortunately, theft is not always limited to gangs and would-be-thieves. A recent survey conducted by RetailSearch found that employee theft accounted for the same percentage of stock loss as shoplifting for large retailers with multiple stores.
This trend also extended to smaller outfits, where an average of £1 in every £5 of stock loss can be attributed to employees stealing from their employers.
Although a tricky situation to tackle, having effective systems in place and remaining vigilant can significantly reduce rates of employee theft.
Returns and refunds
The Financial Times indicate that returns currently cost UK retailers £60 billion per year. This is a figure that is consistently rising in recent times due to increases in online sales, which account for £20 billion of the returns made in the past year.
Fashion stores have the highest rates of return (25% of all items), whilst homeware and electrical goods are at the lower end of the spectrum (10% of all items returned).
If you consider that items purchased as gifts carry a far greater return rate, this really is an area to get right once the presents under the tree are unwrapped and returned!
Distribution
Distribution and supply chains come under stress at this time of the year, but remember, 2021 isn’t just any other year! We’ve already seen issues with a shortage of lorry drivers and the country’s system is suggested to be heavily strained.
When things are strained, things get delayed, mislaid or simply lost, hampering your margin and customer satisfaction along the way.
Pricing and paperwork mistakes
Black Friday is now worth more than £2.5 billion to the UK economy, but whilst sales can lead to items flying off the shelves, if they’re not priced correctly then it can lead to stock and potential profit losses, and incorrect stock labelling is another common cause of stock loss within the retail sector each year.
This is of course only getting greater as sales start earlier and earlier.
How can stocktaking help to remedy these issues during the festive period?
Stocktaking helps you to understand what you’ve got, where it is and where it’s gone missing. When it comes to stock loss at Christmas, identifying where items and products are being lost from your process and to what scale, means that you can make effective decisions on how to fix and remedy the problem before it gets out of hand.
The average retailer will be suffering stock losses of 2%, so can you afford to not find out where yours is going?
For more information on how our experienced stocktaking team can help your business, please give us a call on +44 (0)1637 874609 and we’ll be happy to answer any questions you may have.
