Inventory checks are something every salon owner involves themselves in. Have you ever checked the retail area in your salon or backbar only to find a few products missing? Beauty products are expensive, and as a salon owner, you must take all measures to safeguard them. If you’re looking for ways to safeguard your assets against fraud, theft and pilferage, this blog is for you.
In a salon, spa or any other beauty business, theft or fraud is quite common. Employees believe that even if one product goes missing, nobody will ever know. Well, if you’re still following age-old processes like manual inventory management, nobody will ever know. So, what does a salon owner like you do? The good news? By investing in salon inventory management software, theft, fraud and product misuse can be eliminated.
In 2025, running a beauty business isn’t just about delivering great services – it’s about protecting your bottom line.
You need a system that will put accountability in place, will drastically reduce shrinkage and protect your profits.
Wondering how you can eliminate these silent profit killers in your salon for good? Keep reading to find out!
What is Inventory Shrinkage in a Salon?
Inventory shrinkage is a situation that occurs when there is a difference between the recorded and actual inventory. It is attributed to factors such as theft, vendor fraud and other management errors. There is a common misconception that inventory theft can only occur in the retail industry. However, it is even prevalent in the beauty business and at large.
What is Employee Theft?
A salon or spa even falls victim to employee theft. As the term suggests, theft in a salon occurs when an employee is found stealing products, and misusing and wrongly using company assets in a way that benefits them the most. They can be involved in stealing physical products, or intangible products such as client data and intellectual property. As a salon owner, it’s your duty to be vigilant. Employee theft constitutes inventory theft, cash theft, merchandise theft, time theft, supplies theft, and information theft.
What is Pilferage in a Salon?
Pilferage in a salon is similar to shoplifting in a retail store. It refers to the act of stealing small products or small items repeatedly over time. It is a form of theft. However, it isn’t noticeable. A few scenarios of pilferage include – employees using salon products without permission, staff taking expensive products home in the form of ‘sampling’ and taking petty cash from the register. Although, initially, they may not seem like a big deal, in the long run it will. When it adds up over time, small losses can lead to a large financial impact. If inventory checks aren’t frequent, it even goes undetected. This over a period of time can lead to bigger fraud or theft.
Now that you’re aware of the three silent killers that are affecting your overall bottom line, let’s look at a few ways by which you can prevent theft in your salon.
Strategies that Will Help Minimise Theft, Inventory Shrinkage & Pilferage in your Salon
- Switch to a Robust Inventory Management System
Still counting products on a shelf? If yes, you need to stop. Manual inventory management is error-prone and time-consuming. With an organised inventory software in place, you can reduce inventory shrinkage in your salon or spa. It not just minimises losses but also prevents theft.
For the uninitiated, inventory management is a built-in feature in salon management software. The point is to simplify the tracking of inventory levels, sales records and accounting. You can efficiently track retail and backbar products in real-time and set reordering thresholds. This helps you deal with problems like overstocking or understocking. At all times, you will have just the right quantity of products in your salon to cater to your clients. Inventory software goes deeper by helping salon owners track product usage per service. This means, you can even get an exact figure of how many shampoo pumps were used per service. This reduces inventory shrinkage and there will be absolutely no chances of pilferage.
- Conduct Surprise Physical Checks
Inventory audits are critical to prevent loss. Despite relying on inventory software, physical audits are a must. This also helps you understand your salon’s backbar inventory. Make sure you conduct these audits at consistent intervals. Monthly, quarterly or yearly is ideal. Physical audits help you check if it matches with digital records. It also helps you detect any inventory shrinkage issues early before they escalate. As a salon owner, you should have fixed inventory check days and surprise days.
- Focus on Employee Training
Your stylists and technicians are not just responsible for rendering services in your salon. They’re also responsible for your overall inventory. As a business owner, it’s your duty to hire sensibly. Conduct verifications and see how they fared on their previous jobs. This will help you get a clear idea if that particular employee is a good fit or not. Once you’ve done that, you have to get on with building a trustworthy team. Whether you conduct weekly or monthly employee training sessions, make inventory management an important topic to be spoken about. Teach every employee the ethics to be followed when they’re handling products or tracking stock levels. If they see any kind of discrepancies, ask them to report it immediately. By keeping your team well-prepared, you can reduce shrinkage.
Also, train them on using salon software, and keep them abreast of the updates and any other changes. Training helps you maintain high-standards and reduces manual human error.
- Foster a Positive Work Culture
In any workplace, work culture is everything. From the beginning, it’s important to foster a culture that is transparent and thrives on positivity. Implement clear policies from the very beginning so that every employee is on the same page and knows what is expected of them. Create clear pilferage policies that describe what constitutes pilferage and what doesn’t. Make sure every employee reads the policy thoroughly and are aware of the consequences in case they’re caught stealing.
In the event of any kind of theft, address it openly. This creates an environment that values honesty and integrity. During physical checks, if you find that inventory is handled with honesty and diligence, reward employees accordingly. In a beauty business, it’s all about building trust.
Also, ensure every employee receives fair compensation. Pilferage and theft occur when employees don’t get what is due to them. Make commissions a part of your salon management program.
- Differentiate between Pilferage & Wastage
All too often, employees may be using too much product on a service, and as an owner, you might consider this as pilferage. During the training sessions, it’s important to highlight how much product is supposed to be used for a particular service. For instance, for a hair colouring service, depending on the length of the hair, 20 or 25ml of the tube has to be used. Teach your employees this. Product wastage also constitutes pilferage. A simple way to eliminate theft and wastage in your salon is by recording the amount of product used on the salon management software. By doing so, the auto consumption feature tells you when it’s time to reorder that particular product. This also keeps inventory levels in place thereby ensuring you never run out of your client’s favourite hair colour or nail polish. From the salon owner point of view, they get to keep a check that the product is not being misused.
- Limit Inventory Access
When you’ve visited a salon, have you seen a door that reads “no admission”. Well, if you’re wondering what’s hiding behind that, it’s none other than inventory. As a salon owner or manager, you need to safeguard your stock and retail products. The best practice would be to store them in a backroom with limited access. Only allow certain team members to access that room. You can even install cameras in that room to detect internal theft. If you have a large team, you can even appoint a dedicated inventory manager. This considerably minimises the risk of unauthorised access. It also instils a sense of responsibility among the team.
- Monitor Cash Transactions Closely
Despite a cashless economy, there are many consumers who still prefer paying cash. The POS billing software you use must require logins with unique staff IDs for every transaction. This helps ensure that cash is not misused. It also helps track voids and drawer openings. The software also allows you to set transaction alerts for any kind of unusual activity. Staying on top of inventory is essential to build a successful and profitable salon business.
The Final Takeaway
Make inventory shrinkage, theft and fraud something of the past with Salon360App, the best salon software in India. By embracing the right technology, you can efficiently analyse and monitor data and retail stock. It also helps you make informed business decisions. In any business, safety and security is important, and with the right combination of physical and digital tools, you can safeguard your inventory and client information. Inventory management is an ongoing process and not a one-time activity. Conducting regular checks will help you protect your profits while giving you peace of mind.
