Impact of shortage and the difference
Impact of shortage and the difference
between Markdown and Shortage
Management of a retail supply chain is
one of the key elements that a retailer should consider to get the right amount
of products onto the shelves in a cost-effective manner. Retail merchandise
shortage usually occurs due to erroneous bookkeeping, customer and employee theft
and damage of the merchandise/inventory. In most cases, shortage reduces
profits, raised prices, reduced wages, implements tighter security and placing
more focus on loss prevention. All these activities attributed by shortage make
retailers to operate at a higher cost. For instance, heightening security
depends on the nature of the retail shop. Ensuring security can lead to extra
costs of hiring uniformed security guards and experienced bookkeepers to
monitor stock in and stock outs. Besides the retail operating at a higher cost,
heightening security can also lead to mistrust between employees and management
(Dunne, Lusch & Carver, 2013).
The issue of shortage also leads to
reduced wages. Usually, retailers pay their employees lesser amounts during product
shortage period because they are operating at reduced profits. Offering low
salaries and holding the line on wage increases makes it more difficult for
retailers to retain high-quality employees. Additionally, a report by the
National Supermarket Research Group, retailers operates in low-profit margins
to remain competitive during the shortage period, and the reduced profits have
adverse effects on the full business operability (Horan, 1997).
The main difference between markdown
and shortage is that markdowns are used to push sales of particular merchandise
at a price lower than the marked price, while shortage is used to identify
inventories or merchandise that a retailer records as being on the shelf but
it’s not actually on hand or it has been damaged.
About Customer profiling and have
retailers crossed the line?
Today, most retailers have become more
aggressive in loss prevention strategies, which aim at taking no chances in
restricting suspicious customers, even if it means intercepting innocent
individuals. The move by these stores has done much worse than good. Most
customers who are intercepted at a particular store feel intimidated and swear
not to shop at the warehouse again. Customer profiling has also raised racial
concerns. Most African Americans and Latinos feel that they are being denied
the right to shop at their preferable stores. Most victimized African Americans
and Latinos suspected of profiling are cleared by police without charges due to
lack of evidence. According to Goodman (2013), none of the client profiling
accusations brought forward was accused of any crime by the police.
Impact of employee theft
Most retailers use the black listing as
a way of keeping employees from stealing merchandise. Although some employees
might be legally responsible for stealing merchandise, some the employees will
confess to theft crimes without understanding the impact of their
confession. However, it’s advisable for
companies and retailers to ensure their employee's details are scanned and verified
to ensure they have good morals and don’t have a previous theft record.
According to Clifford & Silver-Greenberg, 2013), beyond scanning employees,
some retailers victimize their employees even when they have done nothing
wrong. Blacklisting won’t solve the problem as employees might not give valid
information during employment. However, Singh (2011), argue that retailers
should instead plan for reduction. Retailers should minimize vendor theft and
employee theft by planning purchase, planning for cost reductions through
involving markdowns. Additionally, cases of employee theft should be provable
and justifiable. Relying on an employee history of work and behavior might not
help that much. Employees should be taught on accountability and judge them according
to where they go wrong (Horan, 1997).
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