Should We Close Our Fitting Rooms to Prevent Theft?

No. The shrink you remove is smaller than the sales you give up, and unlike the shrink number, the sales number has been measured in a controlled field experiment.

Here is the decision as it usually arrives. Shrink is up. Someone walks the floor and points at the fitting rooms. The rooms are where merchandise disappears, nobody is watching them anyway, and closing them frees square footage for stock. It sounds like housekeeping.

It is a revenue decision wearing a loss prevention costume.

How much does fitting room theft actually cost you?

You do not know. Neither does anyone else.

Shoplifting costs U.S. retailers somewhere between $24 and $40 billion a year in shrink and the cost of controlling it, according to Loss Prevention Magazine. What no retailer can produce is the share of that which happened inside a fitting room, because merchandise that leaves in a bag is recorded at the annual count, not at the curtain.

So the shrink side of this decision is an estimate. The sales side is not, and I will get to that.

Two numbers are worth holding while you decide. Between 1 and 2 percent of customers enter a store intending to steal. And roughly three quarters of shoplifting incidents are not premeditated, according to the National Association for Shoplifting Prevention.

Read those together. The overwhelming majority of theft in your store is impulse, and impulse responds to presence. A closed room does not put a person in front of that customer. A staffed room does.

What does closing the fitting room cost in sales?

This is the part that has been measured.

Hyun Seok Lee, Saravanan Kesavan, and Vinayak Deshpande published a study in Manufacturing & Service Operations Management using archival data plus two field experiments at a U.S. apparel and home chain.

Bombshell: Assigning a dedicated associate to the fitting room raised sales by roughly 22.4 to 22.7 percent.

The per-hour figures from the experiment: transactions per hour rose 12.55 percent, sales per hour rose $399.55, equivalent to a 15.98 percent lift in storewide sales per hour. The associate was paid $15 an hour.

Four hundred dollars an hour against fifteen dollars an hour.

The retailer piloted it in ten stores, saw conversion rise 2.1 percent, and rolled it out chain-wide.

You will not find a study that says closing fitting rooms saved a retailer 22 percent in shrink. You will not find one that says it saved 2 percent.

What is a phantom stockout?

It is the cost nobody at your board room mentions, and it is the reason the middle option is the worst one.

A customer carries four garments into an unattended room. She buys one and leaves three hanging. Those three are now inventory that exists in your system and does not exist on your floor. The next customer looking for that size sees an empty spot and concludes you do not carry her. She leaves. Your inventory report says you had it.

The researchers named this phantom stockouts, and it is the mechanism behind the sales lift. The associate is not primarily a salesperson in that finding. She is the person returning merchandise to the floor fast enough that the next customer can find it.

Which means you have three options, not two.

• Closed. No fitting room shrink, no fitting room conversion, and a reason for the customer to buy online instead where she can at least try it at home.
• Open and unstaffed. The shrink of an open room, plus phantom stockouts, plus none of the conversion lift. This is the worst of the three and it is what most stores are running right now.
• Open and staffed at peak. Shrink deterred by presence, phantom stockouts cleared, and the measured lift.

If your store is in the middle option today, you are already paying for the room without collecting on it. Closing it is not the correction. Staffing it is.

Does a fitting room attendant reduce shrink?

Yes, and it costs you nothing extra because the same person is producing the sales lift.

The attendant counts garments in and counts them out. That single act removes the anonymity the fitting room offers, which is the only reason a shoplifter prefers it to any other corner of your store. It also puts a human being in front of an impulse before the impulse becomes a decision.

The same person brings the second size, the different color, and the piece that completes the outfit.

A friend told me how Victoria's Secret built their business in their stores. The best paid person was the person manning the fitting rooms. Associates on the floor would engage shoppers with the goal to get them back to the fitting rooms. Once there, the dressing room fitter would take over, get them measured, then walk them back out to the sales floor saying, "And here is fresh product that will fit you."

Readers, do they still do that? Have you experience it? 

Loss prevention and selling are the same job here. That almost never happens in retail. It is worth not throwing away.

What should you do instead of closing the fitting rooms?

Five steps, in order.

1. Staff the area during peak congestion hours, not all hours. That is what the study tested and it is what paid. You do not need a body there at 10 a.m. on a Tuesday.

2. Count in and count out. Written, not implied. Every associate does it the same way.

3. Clear the room continuously. Garments go back to the floor while the customer is still in the store, not at close.

4. Measure two numbers. Capture rate, the share of store traffic that enters the fitting area. And fitting-room-to-register conversion. A low capture rate is a sales floor problem. A low conversion rate is a service problem inside the room. Different fixes.

5. Train the person you put there. The fitting room attendant is usually the least trained employee in the building, standing in the highest conversion zone in the building. Fix that and the rest takes care of itself.

Read next: Do fitting rooms increase sales?

Frequently asked questions

Should we close our fitting rooms to prevent theft? No. Research published in Manufacturing & Service Operations Management found that a dedicated fitting room associate raised sales roughly 22.4 to 22.7 percent, a measured gain that outweighs an unmeasurable share of shrink.

Does closing fitting rooms reduce shrink? It reduces one venue for theft, but between 1 and 2 percent of customers enter a store intending to steal and about three quarters of incidents are impulse, so the theft moves elsewhere in the store rather than disappearing.

Is a fitting room attendant worth the payroll? In the published field experiment, an associate paid $15 an hour produced $399.55 in additional sales per hour and a 12.55 percent rise in transactions per hour.

What is a phantom stockout? Merchandise left in an unattended fitting room that your inventory system counts as available but no customer can find on the floor. It is the main mechanism behind the sales loss from unstaffed fitting rooms.

Shrink is a number you estimate once a year. Conversion is a number you can move this Saturday. Do not trade the second for the first.