Retail loss prevention (also known as Retail asset protection) is a set of practices employed by

retail Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, and ...

companies to preserve profit. Profit preservation is any business activity specifically designed to reduce preventable losses. A preventable loss is any business cost caused by deliberate or inadvertent human actions, colloquially known as " shrinkage". Loss prevention is mainly found within the retail sector but also can be found within other business environments. Retail loss prevention is geared towards the elimination of preventable loss. Most companies take this traditional approach by either having their own in-house loss prevention team or using external security agencies.

Shrink

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%.

Global Shrink Rates

Average global shrink rates as table by region, ranging from a high of 1.85% in the US to a low of 1.75% in Asia Pacific.

Types of loss

Operational errors

Operational errors are inadvertent

human error Human error refers to something having been done that was " not intended by the actor; not desired by a set of rules or an external observer; or that led the task or system outside its acceptable limits".Senders, J.W. and Moray, N.P. (1991) Human ...

s. 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

External

theft Theft is the act of taking another person's property or services without that person's permission or consent with the intent to deprive the rightful owner of it. The word ''theft'' is also used as a synonym or informal shorthand term for som ...

is when customers intentionally cause shrink by theft, fraud, or vandalism. Also known as Shoplifting, thefts that occur in retail settings are done during business hours and involve the lack of security and prevention measures. Theft prevention can be done by reducing the opportunity to steal in the store through placing prevention mechanisms in place.

Internal theft

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."

Internal loss

Internal loss is caused by associates including internal theft. Examples of such losses include staff members stealing products, cashiers not ringing sales through the tills and keeping the payment for themselves,

package pilferage Package pilferage is the theft of part of the contents of a package. It may also include theft of the contents but leaving the package, perhaps resealed with bogus contents. Small packages can be pilfered from a larger package such as a shippin ...

, staff selling products at discounted prices as a third-party distributor, "sweethearting" by giving products for free to other parties by staff, colluding with maintenance staff or external contractors to steal products, and under-ringing merchandise on the tills for other parties 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. 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.

Loss prevention methods

Apprehensions and Recoveries

Most large retailers have in-store loss prevention employees who are trained to apprehend shoplifters. This can come in the form of uniformed security officers, undercover security, or both. Each state allows stores to apprehend and detain shoplifters under shopkeeper's privilege laws. Apprehensions are typically a last resort after attempts to recover merchandise fail. An attempt to recover merchandise is known as a recovery or a "burn" and is generally one of the primary job duties of loss prevention associates. Many retailers operate in-store loss prevention teams including

Target Target may refer to: Physical items * Shooting target, used in marksmanship training and various shooting sports ** Bullseye (target), the goal one for which one aims in many of these sports ** Aiming point, in field artillery, f ...

Walmart Walmart Inc. (; formerly Wal-Mart Stores, Inc.) is an American multinational retail corporation that operates a chain of hypermarkets (also called supercenters), discount department stores, and grocery stores from the United States, headquarter ...

Macy's Macy's (originally R. H. Macy & Co.) is an American chain of high-end department stores founded in 1858 by Rowland Hussey Macy. It became a division of the Cincinnati-based Federated Department Stores in 1994, through which it is affiliated wi ...

JCPenney Penney OpCo LLC, doing business as JCPenney and often abbreviated JCP, is a midscale American department store chain operating 667 stores across 49 U.S. states and Puerto Rico. Departments inside JCPenney stores include Mens, Womens, Boys, Gir ...

Nordstrom Nordstrom, Inc. () is an American luxury department store chain headquartered in Seattle, Washington, and founded by John W. Nordstrom and Carl F. Wallin in 1901. The original Wallin & Nordstrom store operated exclusively as a shoe store, a ...

, and Sephora. Teams generally have anywhere from 1-15 individuals depending on location.

Security Tags

The development of

electronic article surveillance Electronic article surveillance is a technological method for preventing shoplifting from retail stores, pilferage of books from libraries or removal of properties from office buildings. Special tags are fixed to merchandise; these tags are remove ...

(a magnetic device attached to the merchandise that would trigger an alarm if removed from the store, also called EAS) led to an increase in arrests; however, many cases have been dismissed due to lack of observation of the crime. A later effort, called "benefit denial" by Read Hayes, was intended to reduce the incentives for people to take the items by destroying the usefulness of items that were improperly removed from stores through the use of measures such as exploding dye packs (

ink tag Ink tags are a form of retail loss prevention most commonly used by clothing retailers. Special equipment is required to remove the tags from the clothing. When the tags are forcibly removed, one or more glass vials containing permanent ink will ...

s).

CCTV

CCTV (Closed Circuit Television) is the use of a surveillance system to record any theft or misconduct. It has been widely used all over the world and has affected the decrease in crime globally. It is used to strengthen the central control, responsiveness and crime combating capacity which increases the efficiency and effectiveness of the retail loss prevention methods and strategies.

References

External links

HowStuffWorks HowStuffWorks is an American commercial infotainment website founded by professor and author Marshall Brain, to provide its target audience an insight into the way many things work. The site uses various media to explain complex concepts, termin ...

How anti-shoplifting devices work
{{DEFAULTSORT:Retail Loss Prevention Retailing-related crime Theft Security Protective service occupations