Top ten trends in retail loss prevention

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Neil Matthews, Vice President at Checkpoint Systems, highlights the top 10 Loss Prevention trends as highlighted by the recent Changing Retail, Changing Loss Prevention report that analyses global retail crime and loss prevention (LP) since 2001.

The 2013 report, Changing Retail, Changing Loss Prevention, highlights opportunities for retailers by analyzing the evolution of retail crime and loss prevention trends since 2001. It uses historical data from past Global Retail Theft Barometer reports, produced by the Centre for Retail Research and independently sponsored by Checkpoint Systems.

The report highlights, among various areas researched, that the number of shoplifters apprehended annually continues to be about six million, and this is just the very tip of the iceberg. More than 78% of shrink is indeed due to shoplifting by dishonest customers or retailers' employees. New products in fast-paced categories such as electronics, perfumes and sportswear brought to market every year at premium prices are among the most likely to be stolen while fresh meat remains a high-theft category for supermarket and hypermarkets.

Of the 50 most stolen products, the number of items protected from theft has increased from 60% in 2007 to 75% in 2011 with EAS (Electronic Article Surveillance) source tagging and special high-theft solutions implemented by more retailers each year.

The report highlights that, at its best, a good loss prevention department might have no arrests at all if its prevention work is excellent. But, since the number of global retail thieves apprehended annually continues to be about six million, and only a fraction of thieves are caught, LP still has its work cut out.

Based on the trends analysed over the past decade, Changing Retail, Changing Loss Prevention highlights the top ten trends in loss prevention and retail crime, including:

Loss Prevention must work across multiple areas rather than addressing only crime. There are many targets for crime and fraud in retail businesses, and criminals are developing new practices all the time, so loss prevention has to work on inhibiting theft in many different areas, rather than focusing on only the most prevalent crime problems.

Theft by customers and employees comprises of 78.2% of shrinkage, so alleviating shoplifting and employee theft should potentially do the most to reduce these losses.

Process failures and accounting / procedural errors can account for up to 50 percent of retail losses, although on average it accounts for 16.2% of shrink. It can be caused by many factors including poorly designed processes, weak supervision, poor training and errors made in haste. Naturally, it is as important as any other source of loss.

Investment in loss prevention hardware and software, such as EAS antennas, tags, CCTV and other tools, can play a major part in reducing shrink. However, these tools are not enough. They must be part of a comprehensive LP strategy. Balancing the mix to address the risk, combined with efforts from store associates and LP dedicated personnel, produce the best results.

Loss prevention must work closely with other areas of the business. LP's role is to work with and through other parts of the business, changing how they operate and persuading other functional areas to prioritise loss prevention approaches. Loss prevention is increasingly becoming a service to other areas of the business. This is helped, in turn, by developing joint methods of shrink analysis and control and by the potential use of LP electronic surveillance data and RFID for marketing, operational and logistics purposes.

Loss prevention partnerships with other retailers and law enforcement are a necessary part of learning more about crime and LP trends in a region, exchanging information and smoothing the process of working together to combat loss.

Refund fraud is a growing problem of both shoplifting and employee theft, which is normally based on abuse of existing company procedures. Loss prevention needs to give a higher priority to developing better procedures, staff training, and identifying the worst offenders in order to curb the growth of this problem.

Organised retail crime (ORC), once a problem affecting a small number of countries, is now a major concern. Retailers need to set up internal teams to assess the scale of the problem and product appropriate solutions; work together with other retailers; share information; work with law enforcement; and publicise the ORC problems that they face and any successes they may achieve.

Cargo theft and distribution fraud is a growing and costly problem, often involving ORC, although for most retailers it happens infrequently and this may mean that its importance may be overlooked.

Loss prevention policy compliance should become a standard element of the business. Regular audits of compliance as well as ongoing training are essential. Many frauds such as refund fraud and employee theft are facilitated by weak and inconsistent procedures. Robust compliance and procedures is a vital part of inhibiting these losses.

A free copy of the full Changing Retail, Changing Loss Prevention report can be found at: http://checkpointsystems.us2.list-manage.com/subscribe?u=cfc94008faab665b54ea2b0a0&id=a5639d3092