Retail loss prevention

Items that are unaccounted for compared to what the inventory system believes the store should have are losses or "shrink". Shrink is caused by operational errors, internal theft, and external theft. Retail loss prevention is responsible for identifying these causes and following up with training, preventing, investigating, responding to and resolving them. According to the 2018 Federal National Retail Security Survey, the average Shrink % for US Retailers is 1.33%.[4]

Operational errors are inadvertent human errors. Operational errors occur when associates do not follow existing business best practices and policies or a company lacks the proper best practices and policies to ensure work is performed with minimal human error. Operational errors also occur due to a lack of proper training for associates.

External theft is when customers intentionally cause shrink by theft, fraud, or vandalism. They find that one thing they did not expect to find, cannot afford to pay for it, and will steal it if they have the opportunity. Others are desperate who will steal essentials for their family, but only if they have the opportunity. A few steal because they like the adrenaline rush and will steal, regardless of how much money they have if they have the opportunity. The remainder are "boosters" who are thieves for a living, walk in with the full intent to steal and sell their goods for a profit, on their own, or to a "fence" that sells stolen merchandise.

The vast majority of thieves have one thing in common, they will steal only if they have the opportunity. So theft prevention is fairly easy. Once all prevention measures are in place, resolving external theft in many companies includes apprehending shoplifters.

Internal theft is when company employees intentionally cause shrink by theft, fraud, vandalism, waste, abuse, or misconduct. Since associates have access to the entire building and during non-business hours, they are capable of costing the company substantial losses over a longer period of time.

Internal theft is typically identified by reporting systems, first-hand visual/CCTV surveillance or tips from coworkers. It frequently occurs via dishonest operation of the Point Of Sale (POS) system.

Internal theft traditionally causes more loss to a business than external theft due to the increased opportunity available to internal staff members. "A well-informed security superintendent of a nationwide chain of retail stores has estimated that it takes between forty and fifty shoplifting incidents to equal the annual loss caused by one dishonest individual inside an organization."[6]

Internal loss is caused by methods such as staff members stealing products, cashiers not ringing sales through the tills and keeping the payment for themselves, package pilferage, staff selling products to friends and family at discounted prices, "sweethearting" by giving products for free to friends and family by staff, colluding with maintenance staff or external contractors to steal products, and under-ringing merchandise on the tills for friends or family so they end up paying less for the items. Internal loss, as with other forms of shrinkage, can be classified as either "malicious" or "non-malicious".

The malicious internal loss is shrinkage caused by individuals from within the business such as staff members and cleaning staff and anyone else involved internally in the company. Internal shrink accounted for 35 percent of shrink to businesses in 2011.[7]

Non-malicious shrinkage can result from a number of operational failures within the business structure. The processing of returned or damaged stock, for example, can cause articles to be removed from inventory and discarded (which contributes directly to shrinkage) rather than sold at a discount, donated, returned to vendors for credit, or otherwise removed from inventory in a manner that minimizes financial loss.

• McAfee Institute
• Package pilferage
• Package theft
• Retail
• Shopkeeper's privilege
• Shoplifting
• Store detective
• Tamper resistance

• Rudolph C. Kimiecik; Chris Thomas (2005). Loss Prevention in the Retail Business. Wiley. ISBN 978-0-471-72321-9.
• Read Hayes (2007). Retail Security and Loss Prevention (2nd ed.). Palgrave Macmillan. ISBN 978-0-230-00681-2.
• Philip Purpura (2007). Security and Loss Prevention: An Introduction (5th ed.). Butterworth-Heinemann. ISBN 978-0-12-372525-7.
• Alan Greggo; Millie Kresevich (2009). Retail Loss Prevention: Problems and Solutions. CRC Press. ISBN 978-1-4200-9006-2.

• HowStuffWorks: How anti-shoplifting devices work
• EAS Security System tag
• LP Magazine