Dealing with Pilferage in Your Spa or Salon

Dealing with PilferagePilferage could possibly be impacting your spa or salon’s bottom line in a big way. The bad news is that pilferage is largely invisible as staff and customers can get creative when they want to steal from your spa or salon.

At Zenoti, we’ve talked to a number of customers and found some common themes. For you to deal with pilferage, you’ll need to find an approach of your own. But I’ve offered a few examples of how pilferage often occurs, and ideas on how to mitigate these.

Monitor Your Retail Products 

As with any spa or salon, you probably display and sell retail products. Fortunately, with a few methods in place, tracking pilferage of retail products can be easy.

At a very basic level, you need to know how much of any given retail product you should have – that is, the number of items you purchases and sold. The easiest way to do this is ensure your POS tracks product sales and provides a report that lists each sale. If you don’t have software that automatically tracks how much retail product you’re selling, then it’s important you track this information in a spreadsheet.

You should then conduct regular audits, where you physically count each retail product and ensure this matches with your expected numbers.

For an audit system that allows you to effectively identify where pilferage might occur, track the number of retail products that are in your storeroom separately from those on display on the floor. This process of managing separate records requires frequent updates to both the storeroom and floor records as you replenish your on-floor supply. Software can automatically track this for you. Otherwise, you’ll need to ensure that a proper check-out process from the storeroom, along with the POS report are used to manually update your spreadsheet with retail product balances.

On another note, while it might seem like a good idea to keep your retail products behind a glass case to control pilferage, any physical barrier actually hinders retail product sales.

A tight auditing system however is an effective method to control pilferage.

Backbar Inventory Controls

When it comes to those products that you use for your services, it’s difficult to differentiate between outright theft and wastage. It could be that your stylists or therapists are simply using too much of a particular product when delivering a service.

The only way to identify theft or wastage, is to implement a control system that projects product usage. Here’s how it works:

  • Know what and how you’ve purchased.
  • Identify how much of each product should be used for each service. For example, a hair wash might require 2 pumps of shampoo and 2 pumps of conditioner.
  • Use your POS to track how many services you sold over a period of time.
  • Calculate the total quantity of each product used over say a month, based on all services that were delivered for the month. For example, if you’ve delivered 100 shampoos, you know that 200 pumps of shampoo should have been used.
  • Conduct a physical audit of your non-retail products that are both in the backbar and on the floor.
  • Compare how much product should have been used (e.g. 200 pumps based on the 100 shampoo services delivered) and how much was actually used based on your physical stock that remains.

By comparing the actual usage of product with the projected usage, you can identify areas that don’t match. Gross discrepancies are typically indicative of theft. Smaller discrepancies typically alert you that wastage might be an issue – i.e. a hair stylist is using 3 pumps of shampoo for each hair wash, rather than 2 pumps.

As you can see tracking pilferage for backbar inventory requires more effort than for retail products. But, given the impact on your bottom line, it’s certainly worth the investment in time.

Use the Old Fashioned Lock

You still need the old fashioned lock to discourage theft of things like your backbar inventory. Unlocked doors and storage rooms just add fuel to fire if you have a preexisting pilferage problem. Appoint an employee to be the storeroom manager or inventory manager. And, ensure they lock-up by following a checklist of rooms, cases or other items that hold items that can be stolen.  By appointing a dedicated person, you ensure someone owns this responsibility.

Completely End Gift Card Theft

It’s easy to control gift card theft with today’s technology. For example, spas and salons no longer need to rely on old technology that requires a pre-loaded amount on a gift card. Rather, you can employ a gift card strategy that allows the value to be loaded onto the gift card after purchase. That way, even if a physical gift card is stolen, it’s pretty much useless to the thief.

Another technology improvement is the ability to sell eGift Cards directly from your website. By selling gift cards online, you bypass all possibility of gift card theft. (Not to mention the many other benefits you gain by going online with your gift cards!)

If you’re stuck with old, pre-loaded gift cards, it’s important to implement a daily audit. If you find that this sort of theft is indeed a big problem, consider storing the gift card’s unique id in a spreadsheet each time a gift card is sold. Whenever any redemption is made against any gift card, simply check the list and ensure it was indeed a purchased (and not stolen) card. This method is obviously cumbersome, can be limiting for multi-center spa or salon chains and generally adds an operational burden to your front desk staff (when they should be engaging with customers instead!).

Reduce Wastage

Each item that you re-circulate for treatments, even if it is a 70% used tube of moisturizer, adds up to big savings over time. This reduces wastage of products, and ensures your staff does not pocket half used bottles of shampoo, nail polish or other inventory.

Rotate Staff

If you have a multi-center spa or salon chain with centers in the same city, consider rotating your staff between centers. Rotation helps broaden the skill set of staff, and also helps identify staff members who are prone to pilfering.

Pay a Fair Wage and Award Commissions

You can prevent a great amount of pilferage by giving a fair wage and awarding commissions to your employees. So implement a fair and transparent employee compensation structure. Make sure your employees know the formula for calculating commissions and the benefits you provide. If you use spa or salon management software, ensure that employees have access to their commissions earned for added transparency and trust.

Offer Staff Discounts or Free Products

Giving staff discounts, free services, free products or even a birthday gift card builds goodwill and keeps them happy and looking great. You probably already practice this, but remember if you want to reduce pilferage in other areas be generous here.

 

Create a Clear Policy for Staff

Create a clear policy describing what constitutes pilferage and what doesn’t. Once you do so, you reduce the possibility of any misunderstanding with your staff. It will also help you deal with staff in a clear cut and fair manner if you catch them stealing.

Dealing with Staff Caught Stealing

Once you catch an employee stealing, follow the right procedure and give them a chance to explain their actions before dismissing them. A clear policy on pilferage comes in handy, as it reduces the possibility of the employee hiding behind improper procedure. Both help reduce the chance of a lawsuit.

In the spa and salon industry, you might not be able to do away with theft altogether but you can definitely reduce it. As a cloud solution, Zenoti helps you mitigate pilferage from customers and staff in a variety of ways – some of which are covered in this blog post.

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