Retail loss prevention is a set of best practices created to reduce the risk of merchandise theft and minimize fraudulent returns. With retail loss accounting for 1.47% of lost revenue, store owners should consider prevention a top priority. We gathered expert retail loss prevention tips to help you keep your inventory and bottom line safe.
Here are 23 effective retail loss prevention tips from the pros.
1. Stay Alert on the Sales Floor
Rich Kizer & Georganne Bender, Partners, KIZER & BENDER Speaking
Associates who are aware of what’s happening on your sales floor are the best defense against shoplifters in your store. Thieves hate attention so attentive customer service and eye contact are imperative. If you suspect someone is up to no good, engage them in conversation. In fact, engage every shopper in conversation. Customers will love the attention, and those up to no good will think twice if they know they can be recognized.
2. Include Safety & Security in Your Employee Training
Ray Riley, CEO, Progress Retail
Training around sales and service include components that address general retail safety and security, for example, floor spacing and movement, sincere and non-negotiable greetings, and profit and loss education. This is merely a foundation. However, with the industry’s high turnover rate, new team members should be onboarded consistently with monthly reviews in regard to safety and security protocol: duress buttons, alarm handling, safety phrases, and so on.
3. Advertise Your Security Measures
Andrea Harvey, Safety & Security Specialist, ASecureLife
When it comes to “preventing” theft, the only thing that matters is that the thieves *believe* they would likely be caught if they tried to steal from you. So, even if you can’t afford to put cameras in every corner of the building, set up some fake ones and buy some fake security tags or stickers to put on the products. Hang signs around the store that warn shoplifters of the cameras — maybe even the security guards who are monitoring the footage in a back room somewhere — and remind them of the consequences. Above all, make it known to every customer and employee that you put a huge emphasis on theft prevention, exaggerate as much as possible, and they’ll be unlikely even to try it to begin with.
4. Use Technology to Minimize Loss
Ronen Luzon, CEO, My Size, Inc.
One of the biggest contributors to loss for a retailer is returns — specifically unnecessary returns due to incorrect sizing. Consumers struggle to understand what size they are across various brands, due to a lack of a universal sizing system, which means they are often purchasing and returning items that don’t fit. To combat this, retailers should seek out technologies that can allow their shoppers to have a more personalized shopping experience. There are a variety of technologies available, including mobile smart measurement apps, 3D body sizing, and more, that can empower customers to make the correct purchasing decisions, thereby saving retailers billions of dollars.
Maggie Aland, Marketing and Review Editor, Fit Small Business
One of the many factors of retail loss is human error. To resolve this, you need to keep an accurate count of your inventory as soon as it reaches your store, but this can be a challenge when merchandise moves quickly through your sales process. Lightspeed allows for mobile store counts, so your employees can count your merchandise without having to bring them to the scanner. This makes tracking easier and less prone to loss by human error. Click here for a free trial.
6. Stop Taking Cash Payments
Michael Philippou, Small Business Expert, My Startup Friend
The reality is you can’t run a retail business without giving employees access to your cash till, and you can’t keep an eye on your cash drawer 24 hours a day. We are increasingly getting asked when serving people if we still take cash payments. Take away cash and you take away the problem. The advent of things like Apple Pay and EMV makes it easy to go cash free. Give it five to 10 years and cash won’t even exist.
7. Add Large Mirrors to Your Store
Jon Knight, Chief Security Officer, Fortified Estate
For a small business with many products and limited staff, much simpler technology can be implemented to make a significant impact: mirrors. Shoplifters proliferate when they can’t be spotted, and a small business or start-up may not have the personnel to comb the aisles frequently. Simply placing mirrors in corners and other key areas allows one or two employees to see a whole store easily. These can be integrated into a store’s overall design, while also adding to the perceived size of the store at the same time.
8. Revise Your Store Layout
Rhian Davies, Analyst, Software Advice
Organizing the store layout so that employees on the floor have maximum visibility is another tactic that stores can use to deter theft. By ensuring that product displays aren’t too tall and by avoiding large clusters of products that obscure line-of-sight to the rest of the store, thieves are far less likely to take their chances while in view of store employees. Placing more valuable products near to staff, in locked displays or in high-traffic areas can also help protect store inventory from theft.
Creating a plan to prevent loss in your retail store is an important step in running a business. This is a long-term solution and should involve the entire staff. Begin by pulling out data to have a concrete idea of the current inventory management situation in your retail store. Identify flaws that need to be addressed. Look for tools that can help automate inventory monitoring throughout your sales process and minimize errors.
One of the best options for adding security to your merchandise is by installing surveillance cameras. Recent technology has given way to less expensive surveillance camera system that even small business owners can afford. Depending on your requirements, you can get a variety of options when choosing the type of camera to use. This one offers four indoor and four outdoor, motion-triggered, weatherproof cameras with a DVR recorder and USB enabled back-up.
This goes beyond training. There also needs to be motivation for employees to be proactive and take responsibility when it comes to identifying potential theft. This means encouraging them to get involved while having a sound knowledge of how to identify shoplifters as well as your store’s procedures. You might want to consider providing incentives for employees who take the initiative to engage a potential shoplifter. You can also provide incentives for performing great customer service that can also deter theft.
Security display hooks allow your customers access to your merchandise while preventing theft. Customers have a higher chance of making a purchase if they can touch the product and security display hooks give this freedom while making it much harder for thieves to carry your merchandise away. This is available on Amazon for less than $30.
Keeping your store organized makes it easy for your staff to identify missing items. Shoplifters are attracted to stores with merchandise in disarray as it makes them easier to operate. Not only does a well-organized store deter theft, but it also encourages buying as well.
Aside from shoplifting, fraudulent returns and refunds are also a serious problem in retail. Having a strict return and refund policy helps in preventing this problem. Make sure that your staff is well trained on the common types and signs of return fraud as well as motivated to follow security procedures.
Shoplifters are attracted to stores with inattentive staff, and you can be sure that they will make their attempts when they notice that store employees are either busy or distracted. Install a motion detector doorbell for less than $40. In addition to being an inexpensive antitheft device, it also lets employees know that someone has entered the store, letting potential shoplifters know the store staff is aware of their presence.
The privacy offered by fitting rooms makes it a popular way for shoplifters to attempt to steal merchandise. While customers have the right to privacy in your fitting rooms, it doesn’t mean you can’t combat shoplifting. Make sure that customers are assisted by your staff at all times. Have a way to count and keep track of the number of articles that they bring in to fitting rooms and try and make sure it’s the same when they come out.
Most people associate inventory loss almost immediately to theft. However, it’s important to note that some loss begins much earlier, right from the time your inventory is delivered. Chances are, some of your merchandise never reaches the display. This is a major part of your inventory shrinkage and is still considered a serious problem for retailers everywhere. To solve this, you need a sound inventory management system in place. Store owners need to monitor and audit of deliveries, as a part of your regular procedure for protecting inventory.
Instead of hiring additional staff to improve visibility in your store, consider hiring store security instead. These individuals are not only the security guards one finds by the door. They can also be undercover as civilians or at the back office monitoring security cameras. Getting professionals gives you an advantage as they have skills for de-escalating situations, identifying potential dangers and even training your staff. They can also be part of your customer service team.
You might think that background screening is a not-so-sound investment when hiring employees for your retail store. On the contrary, the high turnover rate for this job is a good indication that you need to consider background screening as part of your application process. Retail background checks will help you identify inconsistencies and red flags that can harm your business potentially.
Before coming up with a retail loss prevention strategy, it’s important to understand the root cause of inventory shrinkage. A loss prevention strategy will only be effective if you know exactly how your store is losing merchandise. Is it from theft? Maybe there’s an administrative error? There are many forms of theft and types of errors, and each one will require a different approach. This will also help you know what to invest in to protect your store.
Proper lighting will not only promote safety but will also discourage theft in your store. Dark areas caused by tall aisles and corners prevent store employees from having a clear view of displays. This provides shoplifters an opportunity to hide merchandise without being seen. A well-lit store gives a feeling of much more open space even with tall isles. When you understand what kind of light every area of your store needs, it gives you a chance to invest wisely in the right fixtures from the start.
It’s not uncommon to find out that a large chunk of merchandise loss is due to employee theft. In-store theft comes in many forms. Aside from stealing merchandise, there are gift cards and cash to consider. There are also instances where cashiers opt not to ring up merchandise for friends or family. Making employees more accountable is a good business decision to protect your bottom line. Set up procedures that deter the idea of employee theft like a buddy system and a point-of-sale (POS) system that can track discrepancies immediately.
Almost all large stores are using a radio frequency identification (RFID) system as added security to their merchandise. It gives improved visibility and accuracy of inventory control that store owners need. RFID systems feature chips embedded in product tags or packages that contains the product information. This lets retailers track their items through a stock control system in real-time. Once these tags are attached to the product store owners get to track merchandise easily from its arrival to its sale.
It’s inevitable that someone will try to test your security and attempt to steal something from your store. When that happens there needs to be an action plan that helps protect both you and the person you caught. Evaluate your shoplifting policies to make sure you have the right procedures in place. How do you confront the suspect? Who do you call? What paperwork do you need to have ready? These guidelines will help you develop a sound a sound shoplifting policy to improve the overall safety of your store for both customers and employees.
The Bottom Line
With the right strategy, you can save your business from devastating losses due to retail shrinkage. Keep in mind these retail loss prevention tips from the experts and take back control of your inventory in no time.
Have more loss prevention tips you’d like to share? Let us know in the comments.