How Your POS Helps Control Shrinkage

The term ‘shrinkage’ refers to the loss of stock by a business caused by the combination of shoplifting, staff theft and administrative and operational errors.  It is estimated that up to 3% of revenue is lost as a result of this costly issue.

While most commonly associated with the retail sector, many cafés, bakeries and bars sell packaged food and beverages or coffee related merchandise, so shrinkage can have an equally detrimental impact on these venues as well. In the hospitality sector, incorrect preparation of customer orders that results in the loss of stock (or revenue) could also be described as a form of shrinkage.

Ultimately, the costs incurred due to shrinkage are passed on to customers, making it a concern for businesses and consumers alike.

table in vintage restaurant

An integrated Point of Sale system can act as a means to control, deter and investigate events that can lead to loss of inventory. Consider these benefits:

  • Price control – proper management of selling prices and keeping all POS terminals up-to-date reduces staff mistakes. Also, minimise open price ‘miscellaneous’ buttons on the POS screen, preventing staff from guessing or discounting without permission.
  • Barcode scanning – this is one of the best ways of providing secure price control for barcoded merchandise.  Even pre-packaged weighed goods can have price or weight embedded barcodes, ensuring price accuracy.
  • Proper control of critical POS functions – security sensitive POS functions, such as refunds, no sales, corrections and discounts can all be limited to manager control. Totals of these functions can also be reported on in back-office software for analysis purposes.
  • Direct feed of sales data – most POS systems have the ability to display a ‘live feed’ of journal data in the back-office as the POS is being used.  It is particularly beneficial to let staff know that this feature exists.
  • Updating shelf labels – ensure that you can immediately export item data to shelf label software at the time of price changes, meaning that advertised prices on the shop floor are kept consistent with prices in the POS (complying with consumer law).
  • Journal data storage – your back-office software should also collect and store historical journal data directly from the POS, providing searchable reports that aid in the tracing of suspected anomalies.
  • Stock control – comprehensive stock control allows venues to track stock movement and more quickly spot irregularities in stock levels. Admittedly, there is some effort required in setting up and maintaining a full inventory system, but if problems are occurring in the venue as a result of shrinkage, implementing stock control can assist in a more immediate discovery of the source of the issue.

Even small cafés and bakeries should consider these benefits to assess whether the investment in an integrated POS solution such as our Uniwell4POS solutions can effectively ‘pay for itself’ in savings resulting from the minimisation of retail shrinkage


Photo by Kaboompics .com on

Article originally written for Uniwell4POS, and has been modified with permission.

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