Retail loss prevention is a set of best practices designed to identify and mitigate shrinkage, or inventory loss. This loss primarily happens through shoplifting, returns fraud, and employee theft.
Follow these retail loss prevention tips to protect your business, which is more important now than ever as 69% of retailers reported the COVID-19 pandemic increased fraud, crime, and overall risk to their company.
1. Organize Your Store To Minimize Shoplifting
Poorly organized stores can make it easier for would-be thieves to take something without being seen by an employee or security camera. Reduce retail loss due to theft by organizing your store in a way that makes it easy for employees to see shoppers. Ensure maximum visibility by creating displays that arent too tall to see over. Likewise, avoid large clusters of products that will prevent employees from keeping an eye on shoppers.
Pro Tip: Consider installing mirrors in strategic locations throughout your store. Mirrors can reduce blind spots and make it easier for employees to monitor customers without hovering or being too aggressive.
In addition to improving visibility, an organized storefront will also make it easier to tell when merchandise is missing. This not only creates a deterrent for thieves but increases the likelihood that you will notice missing products sooner, so that you can account for the loss in your records.
For more details on how your merchandising strategy can impact loss prevention, download our free step-by-step guide to planning an effective store layout.
Download Free Store Layout Checklist
2. Greet & Assist Your Customers
Taking time to greet each customer as they enter can deter shoplifters because it indicates that you are paying attention to what they are doing.
A stores floor plan is only as effective against theft as the employees are. Make the most of your stores strategic layout by training associates to be attentive while on the sales floor. This involves greeting each shopper as they arrive, making eye contact, and engaging shoppers in conversation. Many customers will appreciate the extra attention, and would-be thieves will be less likely to steal if they know someone is actively keeping tabs on the sales floor.
If you want to learn more about the best way to greet customers into your store, check out our article on tips for welcoming customers into your stored .
3. Train Employees to Spot Suspicious Behavior
Most retailers spend time training employees on products and sales tactics. However, it is also important to teach sales associates how to spot suspicious behavior. Teach your staff to keep an eye out for red flags, such as:
- Picking up items and replacing them repeatedly
- Looking around to see whether theyre being watched
- Moving away from employees
- Swapping price tags
- Moving products to different packaging
Protect your business by establishing protocols for employees who spot concerning behavior or active shoplifting. Also, provide regular training on the location of duress buttons, how to handle the security alarm, and any safety phrases for communicating between team members when theft is occurring.
Did you know?
In 2020, the National Retail Federation (NRF) reported that the average dollar loss per shoplifting incident is $461.86, and the average loss per robbery is $7,594.48, which is significantly higher than in previous years.
4. Install a Security System
According to the NRF, 52.8% of retailers are planning to allocate more resources to theft prevention technology. If you already protect your store with a security service like ADT, find out what kind of interior monitoring hardware it offers. This may be more expensive than some options, but a security professional can help you choose the best places to install cameras and help you set up the monitoring equipment. Alternatively, try a provider like SimpliSafe that lets you set up a wireless security system for less than $200, plus optional monitoring.
See our top picks for the best business security systems .
In addition to investing in storewide security measures, consider tagging products and installing an exit sensor system. These strategies cant guard against fraudsters swapping price tags or packaging, but they will likely deter would-be thieves and thwart any actual shoplifting attempts.
5. Advertise Your Security Measures
Security cameras are a visible way to show that your store is keeping an eye on the premises and takes theft seriously. Often, the mere presence of security equipment is enough to deter shoppers and employees from stealing or swapping price tags. You can even consider installing fake equipment that gives the illusion of a comprehensive security system if you cant afford actual cameras.
Potential thieves may also be deterred by signage that warns them of security cameras and the consequences of stealing from your store. Keep in mind, however, that too much signage can be off-putting to paying customers. Keep it professional and decide whats appropriate for your business and clientele.
At my boutique, for example, we had signage at the entry that let shoppers know that they were being watched. Our security cameras had not functioned properly for years, but the sign and broken cameras were enough to keep thieves from attempting to steal.
Here are a few examples of good security signage:
Draw attention to your security system to further deter would-be thieves.
For the sake of normal shoppers, using a more friendly sign makes you seem less accusatory. (Source: Amazon)
In some cases, you might even want to add smaller signage to your shelves. (Source: Quora)
6. Track Inventory Using Your POS
Inaccurate inventory tracking can lead to retail loss and make it more difficult to spot theft, fraud, and human error when they occur. Use a point-of-sale (POS) system to keep an accurate count of your inventory so that you can detect when you are missing items you shouldnt be.
Did you know?
In the 2020 National Retail Security Survey, POS analytics remains the most popular loss prevention measure, deployed by 56.5% of retailers .
A POS system can also help employees spot fraudulent returns and ensure customers are otherwise complying with the stores return policy. Youll also be able to identify ongoing issues with shoplifting by regularly reconciling your POS system with whats actually in stock.
To learn more about the best POS systems on the market, check out our top-recommended POS systems for retailers .
7. Minimize Cash Payments
Having a cash drawer at your place of business can make you an easy target for third-party thieves and employees. It makes you a target for counterfeit bills, cash skimming, and fraudulent returns. Eliminate this type of retail loss by reducing cash payments and encouraging shoppers to use credit cards, digital wallets, and other more secure forms of currency.
Learn how to spot counterfeit money with this guide for detecting counterfeit money .
8. Require Receipts for Returned Items
Retail loss doesnt just occur when someone takes an item from your store without paying for it. While some people steal items and then return them for a refund, others buy merchandise, use it, and return it for a full refund. Retail losses may also be due to fraudsters who counterfeit receipts and return items for cash.
Learn how to write a solid return policy for your business with our return policy guide .
Consider taking these steps to prevent return-related retail loss:
- Require a receipt for all returns
- Advertise and enforce a strict return window30 days is common
- Confirm that the returned items exactly match those on the receipt
- Require customers to provide personal information when initiating refunds
- Customize your receipts in a way that makes counterfeits more easily recognizable
- Train employees to recognize the signs of returns fraud
- Issue refunds to the original payment method, not cash
9. Take Steps To Limit Employee-related Loss
Unfortunately, retail loss can also occur as the result of employees, whether intentionally or not. Inexperienced and poorly trained employees may fail to adequately track inventory and forget to ring up items in a customers cart. Even your best sales associates can fall prey to a fraudulent return. Sometimes, you even get dishonest associates who steal merchandise and cash.
Did you know?
In 2020, each dishonest employee cost retailers an average of $1,551.66 , with more than 50% of retailers reporting an average dollar loss of $1,000 or more per incident.
Employees who aim to steal from your business may take items like a shoplifter, create fake returns and pocket the cash, or steal customer credit card information to make fraudulent purchases elsewhere. These losses may also be related to friends and family. Consider, for example, an employee who uses his discount to make purchases for a friend or doesnt ring up all of his friends items when checking out.
To limit your stores susceptibility to employee-related losses, consider all new hires carefully and obtain professional references when possible. Once an associate joins your team, provide adequate training to avoid inadvertent losses from shoplifters and colleagues. An incentives program that rewards employees for preventing retail loss may also be effective.
Retail loss prevention is necessary to reduce the impacts of shrinkage on a businesss bottom line. Because shrinkor retail lossis such a common issue, there are several ways to deter shoplifting, reduce human error, and incentivize employees against stealing. Once you familiarize yourself with the types of retail loss and how theyre impacting your business, start incorporating a few tips to safeguard profits.