Dispensary Shrinkage

8 min read

Loss Prevention Tips: How to Reduce Shrinkage at Your Dispensary

November 5, 2021

Loss prevention tips are something that all business owners should be aware of. Shrinkage can be detrimental to any company, but additional challenges exist for dispensaries where inventory is tightly regulated. There are many different strategies for reducing shrinkage, but not all of them work in every situation.

This article will explain what shrinkage is and how you can minimize its impact on your dispensary’s bottom line.

What is Shrinkage?

The first step is to understand how shrinkage works within the retail industry. Shrinkage refers to all of the products that are lost or stolen from a business over time, and this number can really add up quickly! Depending on how big your dispensary is, you may have hundreds of dollars worth of items go missing every day.

There are a few different strategies for preventing shrinkage, and your choice will depend on how you run your dispensary in general.

Inventory Audits with RFID

One way to reduce shrinkage within your dispensary is through inventory audits. This will help you keep track of how much product is actually in the store versus how much should be there, and you can then use this information for future business decisions like buying more or less cannabis from suppliers.

Inventory audits are conducted by using radio-frequency identification (RFID) technology. The technology consists of the following components:

  • RFID tags that store information about products.
  • Reader hardware that sends and receives signals. It can interpret product encoded data from tags.
  • Software that processes data for a user.

Here are more of the ways RFID solutions can help:

Inventory overview – RFID inventory reviews keep track of all the items you have on hand. It may also help identify deterioration, loss, and spoilage in a matter of seconds.

Avoid human error – Inventory loss prevention often comes down to human error. RFID allows for automated and real-time reporting of data, so there is no inference by any employees.

Quick scanning – RFID can scan up to 900 tags per second, saving you time and labor costs as well as reducing shrinkage.

Monitor product expiration dates – An essential factor in minimizing shrink percentage is monitoring the expiration dates of the products you have on hand. RFID helps you locate and reorder expired items to replenish stock quickly.

Making deliveries with ease – RFID scanner allows you to create delivery orders much faster. It gives you peace of mind knowing the customers are getting the products they ordered with no mistakes.

Higher customer focus – With quick scanning and effective tracking, your employees have more time and energy to pay attention to customers and their needs.

How to Reduce Shrinkage

There are many different strategies for reducing shrinkage in retail. They depend on how you run your business and what type of inventory management system you have set up.

Some of the factors to consider when trying to prevent shrinkage include:

  • Store Layout
  • Access Control Systems
  • Security Cameras
  • Loss Prevention Culture
  • Regular Inventory Audits
  • Internal Theft Prevention
  • Point-of-sale (POS) Systems
  • Expiration Dates Tracking

Store Layout

First, shrinkage reduction depends on how you plan your store layout. This is important because if the product placement doesn’t make sense or isn’t organized, customers can easily pick up an item and walk right out without paying for it, which will be recorded as shrinkage in your inventory reports.

Also, you want the store to be laid out so that it is easy for your employees to quickly access all different areas of the store. This will make checking inventory easier and help reduce shrinkage in general.

The store layout should also allow your employees to see as much of the store as possible. Security cameras can assist in this matter as well as having your employees in the central location where they can see how many customers are coming and going, how long lines are getting at checkout, etc. This makes it easier for them to keep an eye on everything within their sightlines.

Access Control Systems

Access control systems can limit access to certain areas, for instance, to your dispensary storage. Only employees will be able to go there. Consequently, the risk of shrinkage will be minimized. Some access control systems can prohibit access on certain days or for some hours. They can be helpful if you are aware of the hours when a flow of customers is high.

Access control systems include detection of intrusions, surveillance, and response features. So, it allows you to quickly investigate who and when tried to intervene if an accident happens.

Security Cameras

When thinking about reducing shrinkage, you also need to consider the security cameras in your dispensary. These devices are great at keeping track of everything happening both outside and inside your store.

However, you need to make sure your employees know where the security cameras are at all times. For example, imagine an employee is caught on camera stealing products or money from the cash register. In that case, it will be recorded as shrinkage in your inventory reports because they should have been watching out for that type of activity and preventing it instead.

However, you need to make sure that your employees are aware of cameras and the fact that their actions are recorded. In this case, surveillance is legal. Keep in mind that laws vary from state to state.

You may want to consider making sure your security cameras are constantly recording when not being streamed. If the cameras don’t have a constant feed, you lose all data that comes in through them, which can help identify potential thieves or internal problems within the dispensary itself.

Loss Prevention Culture

Creating a loss prevention culture within your dispensary is another way to reduce shrinkage at a retail business. This means that the mindset of both employees and employers should be changed so that an effort is collective. There are some recommendations to develop such a culture:

  • Create a strategy with a value system that the whole staff will share and follow.
  • Increase an employee presence near valuable products.
  • Assign a “zone of influence” for each employee.
  • Use closed cases to prevent customer access to items.
  • Award your employees if there is no shrinkage in their zones.

This also means you should have a consistent process for handling situations with theft or anyone caught breaking the rules so that it is clear and all employees know what will happen if they step out of line.

Regular Inventory Audits

Frequent inventory checks can help reduce the amount of shrinkage you experience. If you conduct inventory audits at least once a day, you will be able to notice shrinkage faster and take measures to investigate the incident.
If you think it is impossible to manage inventory once a day because of the amount of manual work, you should definitely check different RFID solutions. Modern RFID readers allow you to scan up to 900 tags per second. So, daily inventory audits are not a problem.

Internal Theft Prevention

Internal thefts can be the most problematic issue to solve when reducing shrinkage at a retail business. There are many ways to prevent loss in dispensaries, including security cameras and access control systems.

Still, some employees will steal anyway. One of the things you can do in this case is get to know your employees, their lifestyle, and habits, addictions, if any. Some characteristics may help to recognize an unreliable worker:

  • Money spent is above the salary level.
  • Abuse of drugs or alcohol.
  • Evidence of obsessive gambling.
  • Tendency to borrow money without returning it.

It would be best if you also had an open-door policy for your employees so they could talk to you about any problems or concerns that come up within the dispensary. This will help them feel as though they are being heard and valued, which could reduce how much shrinkage comes from internal theft, such as stealing cannabis products instead of money.

Rewarding valuable employees will also help you create a loss prevention culture within the store because they feel like they are part of something bigger. This will make them more likely to care about your business and its products, meaning stealing would be out of the question.

Point-Of-Sale (POS) Systems

Using a POS system is an effective way to reduce shrinkage in retail stores. In addition, POS systems are excellent since they can be integrated with other inventory management software like RFID scanners, meaning there won’t be any issues when it comes to reducing the loss for dispensaries.

Suppose your POS system is integrated with other inventory management software like RFID scanners. In that case, the two systems can work together and provide accurate data for both loss prevention and sales operations.

Another consideration with regards to the POS system is proper training. Make sure you train all of your employees on using the system correctly. Knowing how to use the POS system can also help avoid mistakes that an employee could make not knowing how to ring out customers accurately.

Expiration Dates Tracking

Keeping track of product expiration dates is an important task to ensure how you are reducing shrinkage at your dispensary. However, if proper care isn’t taken when it comes to monitoring the expiry date, there can be many cannabis products that go bad and have to be thrown away. This will end up resulting in financial losses for your dispensary, which you could have easily prevented.

To reduce shrinkage, you should implement an inventory management system that can help you monitor the expiration dates of all products and let you know when they are about to expire. You can take proactive measures instead of waiting until it’s too late.

IndicaOnline RFID solution

At IndicaOnline, we understand how important your retail dispensary business is and how to reduce shrinkage in the process of running it. That’s why we have developed a comprehensive inventory management solution that includes RFID scanners and more.

If you would like to learn how our system can help reduce shrinkage in your dispensary, please contact us to go over the details. Our knowledgeable representatives will be happy to answer any questions you may have about reducing losses for dispensaries with our inventory management system.

From inventory audits with RFID solutions to using a modern POS system that works best for dispensaries like yours, we aim to help you set up on the right path towards success today!