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Business Development Function Learning Retail Learning Topics

Retail Loss Prevention

6 min read

Retail theft and shrinkage is a major concern for retailers which is costing businesses enormous amounts of money. Losses due to shoplifting, employee theft, fraud, vendor theft, and administration errors, greatly impact a store’s ability to achieve top sales and revenue. As a direct result, retail loss prevention is one of the main determining factors to retail success and profit.

Retailers need to develop strategies and be more vigilant about retail loss prevention. Reducing its susceptibility to crime, allows a business to improve its profitability, brand image, and overall bottom line. Adjusting work practices not only helps to prevent crimes, loss and shrinkage but also improves overall store security and safety.

Types of  Retail Loss Prevention


Stock shrinkage is the difference between the book value of a retailer’s stock at selling price and the actual value of stock on hand. This is caused by unaccounted stock through inaccurate invoicing, receiving, despatch and poor stock recording; theft by staff and also customer theft/shoplifting.

Employee Theft

Employee theft from a retail store is when an employee steals merchandise, food, cash, or supplies whilst they are working. There are numerous ways for staff to steal from their employers:

  • Stealing merchandise
  • Stealing cash
  • Allowing others to steal merchandise
  • Under-charging customer accomplices
  • Adjusting delivery dockets
  • Under-ringing purchases at the cash register
  • Adjusting the shrinkage records
  • Eating food
  • Using company time and facilities for personal projects
  • Fraudulent refunding
  • Deliberately damaging goods to purchase at staff discount

Employee theft is a particularly deceptive crime because the employer is paying them a wage or salary on top of paying for the cost of their dishonesty. Also, as staff are in a position of trust, they can do much more damage than external shoplifters as they have an insider’s knowledge of store procedures and security measures.

Customer Theft

Shoplifting occurs when someone steals merchandise offered for sale in a retail store. Customer theft usually involves the concealment of merchandise in bags, pockets, under a jacket or even a pram, but can occur by a variety of methods. Most shoplifters are amateurs, yet they can still be highly skilled. Some may steal every day, but they generally don’t do it to make a living. Most amateurs are opportunistic, use basic methods and are caught more often than not. There is no stereotype when it comes to shoplifters. They vary in age, gender, ethnicity, social status and educational background, which makes them difficult to detect.

Professional Thieves

Professional shoplifters range from being highly skilled individuals to working in teams and gangs. Being professional means that they steal merchandise for a living and tend to concentrate on stealing items that retain their resale value and are easy to convert into cash. These professionals sometimes use force by often committing grab-and-run thefts. These professionals can be very difficult to stop, especially as many retail stores openly display their merchandise.

Read About Customer Experience Mistakes

Tips to Prevent Shoplifting:

Customer Service

Providing excellent customer service is the most effective deterrent against all forms of customer theft (amateur and professional thieves). Shoplifters find it much harder to steal if they are being served to a high standard as more attention is being focused on them, which provides them with less opportunity to carry out their deceit.

Be Observant

All staff should be alert and well-trained on how to “spot” a potential shoplifter. There are usually tell-tale signs and employees need to watch for customers who avoid eye contact, appear nervous and wander the store aimlessly without buying anything. Also, be wary of customers repeatedly returning to the store, lingering in corners and just looking suspicious.

Staff Appropriately

Ensure that there is an adequate number of employees working at the one time to be able to give customers proper service. Stagger lunch and break times among employees to provide enough coverage during busy times. Encourage staff to walk around the store (not just down the centre), down various aisles and especially along the walls of the store. The more staff there are monitoring the store, the harder it is for shoplifters to operate.

Greet Customers

Every customer that enters the store should be greeted. This lets the customer know that you are aware of their presence and removes their anonymity. Staff should always make themselves available to all customers and never leave the store unattended. Mention that you will be nearby should they require your help as this makes potential shoplifters feel like they are being watched. Shoplifters are known to avoid stores with attentive salespeople.


Maintaining a clean and organised store is important as it allows you to see what merchandise you have and where it is located. Ensure that racks, shelves, storerooms, shop floor, registers, dressing rooms, and all other areas are neat, tidy and organised. This allows you to easily notice when something goes missing unexpectedly. Keeping a disorganised and messy store communicates to shoplifters that employees are not attentive and basically invites them to steal from you.

Store Layout and Design

Arranging the design layout of a store is crucial to preventing theft. Where you place and display merchandise should be carefully thought out and considered. Small merchandise and items that are often targeted need to be placed at the front of the store, near the cash register or counter where they can be easily monitored and discourage shoplifters. Expensive items should be locked in glass cabinets, ensuring that the cabinets are actually locked and the keys are secure. Shelves and displays should be kept low and adequate lighting needs to be installed to maintain visibility throughout the store.

Visible Security

Having visible security measures in place around your store can help deter would-be shoplifters. Adding mirrors around your store eliminates any blind spots, thus making it difficult for shoplifters to be able to conceal stolen goods without being seen. Displaying anti-theft signs that emphasize “Shoplifters will be prosecuted” can also act as an effective deterrent. Consider other anti-theft devices like security towers at entrances, anti-theft tags on merchandise, motion sensors or security guards. Even having CCTV surveillance stickers at the main entrance can be enough to make shoplifters re-think their intensions.

Security Cameras

Installing surveillance cameras is a key element when it comes to protecting your business, staff and the bottom line. Consider various options depending on your budget. Ideally, you need security cameras that offer live and recorded video footage, so you can monitor your business when you’re trading and when you are closed. This also allows you to detect any suspicious activity whilst it’s taking place. If budget doesn’t permit, consider using fake cameras around your store as a deterrent as more often than not, shoplifters will be none the wiser.

Checking Bags

Implement a store bag-check policy and procedure and ensure customers are aware of it by using relevant signage. Inspect all large bags and backpacks as customers leave the store and make sure that no bags are taken into the dressing room area. Depending on the size of your business, employ a door greeter who not only meets and greets customers entering the store, but also checks bags for those leaving. Honest customers generally don’t have a problem with showing their bags as they have nothing to hide.

Discuss Concerns

Make it known to staff that if they witness any suspicious behaviours, they should record it in writing, discuss it with management or log their concerns so that others can also be made aware. Communicating with other staff members as well as other nearby business owners about any suspicious activities creates a proactive environment when it comes to loss prevention. Also, ensure that any concerns that staff may have on how to prevent shoplifting or how to handle a situation if it does occur are addressed properly and adequately.

Inventory Management

Inventory management is an essential tool which can be used in retail loss prevention. Having a record of what is purchased and then comparing it to what is actually sold, allows you to determine what inventory is unaccounted for or stolen. Identifying what merchandise is mostly stolen allows you to put in place extra security measures to minimize further stock losses in that area. Staying on top of your inventory and tracking your merchandise is crucial as any discrepancies can be corrected before too much damage is done.

Strategies to Reduce Employee Theft:

Whilst preventing employee theft is a challenge for retailers, there are steps that can be taken to reduce the opportunity, desire and motivation for employees to steal:

  • Ensure there are good hiring and training procedures in place.
  • Supervise employees and managers closely.
  • Have policies in place to prosecute dishonest employees and make it clearly known.
  • Show a deep commitment to prevent losses at every level.
  • Limit opportunity by ensuring employees are not working alone.
  • Ensure that all refunds and voids are witnessed and authorised by a second person.
  • Use a video surveillance system to deter staff as well as customers.
  • Have policies in place for rubbish removal to discourage using this as a method to steal.
  • Connect with employees, get to know them and build relationships of trust.
  • Provide co-workers an avenue by which they can report theft anonymously.
  • Reward “good” employees with wage increases or discounts to deter them from stealing.
  • Ensure all staff purchases have receipts attached and that the bags are sealed.
  • Make unannounced store visits and conduct audit checks without warning.
  • Have an inventory-tracking system to let staff know that stock is being monitored.
  • Ensure there is a policy for how “no-sales” are handled at the register.
  • Don’t have the same person handle preparation, payment, and receipt of purchase orders.
  • Have policies in place with regard to serving family and friends.

Whilst retail theft cannot be completely stopped, it can definitely be prevented and reduced. By using a variety of theft reduction techniques, you make it more difficult for customers and employees to steal from you. Finding the best solutions and what will work for your business, is crucial in tackling retail loss prevention.


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