The Importance of Inventory
According to our recent survey of retailers, internal theft is seen as a big problem. Internal theft is stealing perpetrated by employees, owners or investors in a company, as opposed to shoplifting or theft by outsiders. Employee theft is seen as an insidious problem because it is often difficult to detect, and can be even harder to pinpoint the source. However, 74% of the retailers we surveyed said that internal theft is their major source of theft.
ROI Inventory, a daughter company of Visual Retail Plus (VRP), was founded in 2011 to provide physical inventory services to retailers. Taking physical inventory is important in maintaining an accurate point-of-sale (POS) system, “but we are also well aware of the issues of fraud and theft,” says Hili Shrem, Director of Business Development for Visual Retail Plus.
ROI Inventory came about because many VRP clients were asking who could perform a physical inventory count for them. “Taking inventory is a bit like going to the dentist,” Shrem jokes, “no one wants to do it until they are in pain.” The inventory process is tedious and can be time consuming, particularly if the product under consideration is small and/or numerous. Not only that, but the logistics of taking inventory generally require that it happen after hours, when customers aren’t shopping. Timely inventory taking also requires the right equipment. “We need at least 10-15 scanners to complete a job quickly. Most small to mid-size retailers have two or three,” Shrem points out.
There are many reasons to take physical inventory. Fashion retailers often inventory merchandise at the end of a season to determine what needs to be sold off, perhaps at a discount, to make room for fresh product. “If a retailer has both e-commerce and a brick-and-mortar store, accurate inventory is highly important,” says Shrem, “you don’t want to sell a product online and then have to go back to the customer and say you don’t actually have it.” And then there is the issue of theft. Taking physical inventory can point to areas where actual merchandise and POS counts are not reconciled, which may require further analysis of POS data.
ROI Inventory offers clients multiple options for completing the inventory process. ROI assesses the situation with an on-site survey and then makes recommendations based on clients’ desires. For example, ROI Inventory will bring in a manager and employees to pair with a client’s employees or clients can rely solely on the ROI Inventory team to complete the process. Often, when theft is suspected or has been an issue, clients will use only the ROI Inventory team. “We divide the merchandise into lots, scan every item, and then manually double count,” says Shrem. “We’re proud of our accuracy.”
When inventory is complete, clients receive updated files to upload to their POS systems. VRP clients have the added benefit of receiving a discrepancy analysis, which, when combined with the VRP loss prevention and commission reports can point to reasons for count discrepancies.
Recently, eConnect, a software company that provides financial transaction analysis from the point-of-sale, discovered that an airport client was the target of a new scam. While reviewing sales data, the loss-prevention team noticed a large spike in bottled water sales. When comparing data to surveillance records, the company found that bottles of water were rung up while something more expensive was given to friends or coworkers.
Shrem recommends that inventory be conducted, at a minimum, once a year. “Twice a year is ideal; however, for some retailers, four times a year is needed,” she says. ROI Inventory can help clients who haven’t gone through the process in years. They have even developed a method to conduct inventory in places where bar codes are not yet in use, as long as there are many of the same item. Furniture manufacturers, for example, would have numerous table legs of a certain type that may not be bar coded.
ROI Inventory works with customers’ varied needs through the process because they know what a pain inventory can be. They also know how important the resulting data can be in business management and loss prevention.