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    Top Retail Loss Prevention Strategies for Online and In-Store

    by: Chris Caesar
    Top Retail Loss Prevention Strategies for Online and In-Store

    If you’re like most people, losing your phone can be the final straw that turns a difficult week into a straight-up disaster. Heck, even the sting of losing a sock in the laundry can upend an otherwise good morning.

    Now, magnify that frustration by about $94.5 billion. That is, staggeringly enough, the amount global retailers lost to shrinkage in 2021 alone.

    Not a great feeling, is it?

    In fact, Organized retail crime (ORC) incidents were found to increase by as much as 26.5% year over year, according to research from the National Retail Federation (NRF).

    These numbers aren’t just statistics — they should be serious wake-up calls for any business. As retailers in both online and in-store spaces gear up for back-to-school and holiday sales, the importance of maintaining rigorous loss-prevention strategies — across your business — is nearly impossible to overstate.

    This post will examine some of the biggest threats to your business when it comes to retail loss, as well as some straightforward best practices brands can adopt to minimize them.

    Different Forms of Retail Loss

    As one iconic 80s toy line touts: “Knowing is half the battle.”

    Retail loss can occur in all kinds of situations: everything from legitimate accidents and minor acts of shoplifting to more coordinated, targeted, and sophisticated operations. Taking time to understand the various factors driving your brand’s shrinkage is the first step in empowering yourself to prevent it.

    Here are some of the largest drivers of retail loss.

    Organized Retail Crime

    That $94.5 billion figure didn’t come from little kids swiping candy bars — most of it, by far, is driven by organized criminal enterprises who are well-adjusted at identifying flaws in your brand’s security and inventory controls.

    Groups can engage in activities like cargo theft, credit card fraud, and some innovative new approaches, like altering gift cards for resale or making fraudulent purchases. These thieves also frequently target elderly customers or unsuspecting employees with phishing attempts, both to steal money and find new angles of attack against your business.

    As these incidents are very much on the rise, addressing these emerging threats should be a top priority for any loss prevention strategy. 

    External Theft

    While ORC indeed poses a major threat, it’s not the only kind of theft out there.

    There are the traditional kinds of scams often associated with retail loss — shoplifting, burglary, robbery — but others can be more insidious. Scams like fraudulent returns, where the customer either retrieves an item off the shelves to “return” it before paying or simply swapping a good product for a broken one, are another clever way that many bad actors can take advantage of your business’s good nature.

    To clarify: While ORC can certainly engage in any of these practices, it’s the scale that sets ORC apart from mere “external theft.” Relatively small as these losses may be, they’ll still chip away at your company’s bottom line — and can quickly add up if brands aren’t vigilant. 


    For all of the conveniences of the digital age, it too comes with its own set of dangers worth avoiding.

    A recent Shopify study found that 56.8% of marketers saw an increase in cybercrime attacks from 2020 to 2021 — and as scammers grow more sophisticated, so too should the brands they’re preying upon.

    This jump isn't limited to just one type of crime. For example, data breaches can expose sensitive customer information, from credit card details and other forms of personal identification. Phishing attacks are another common way for scammers to infiltrate your business and bypass security systems for illicit gain. 

    Loss Prevention Tactics for Traditional Retail Spaces

    Brick-and-mortar stores, with their bustling aisles and often expansive store floors, can still draw a considerable amount of foot traffic, even in the increasingly digital world. (And there’s nothing wrong with that!)

    But every shelf, aisle, and interaction in these spaces calls for not only a careful eye but also a strategic, coordinated approach to loss prevention. Here are a few best practices to consider that will not only protect your employees but your bottom line. 

    Clear, Consistent Security Policies — And Training

    Of course, the bedrock of any successful loss prevention strategy is a clear, comprehensive security policy. These guidelines, in conjunction with consistent enforcement, signal to both customers and employees alike that your business takes loss prevention seriously.

    Once in place, providing regular training on your loss prevention policies will help to clarify expectations and offer some flexibility when adapting to new or emerging threats. This should help drive a culture of accountability and vigilance at your stores — at least if done effectively. 

    Harnessing Technology

    “Traditional” as they may be, brick-and-mortar spaces can still reap many of the benefits associated with the digital age — especially when it comes to loss prevention.

    CCTV systems, for instance, have become more than just after-the-fact surveillance tools. With features like motion detection and facial recognition, these networks can not only gather crucial evidence during incidents but also help identify past offenders and deter illicit acts before they occur.

    Smart shelves, equipped with weight sensors that instantly detect item removals, can assist in both theft prevention and your staff’s restocking efforts. Electronic surveillance tags — which can set off an alarm if an unpurchased product leaves the store — are also a tried and true method of deterrence.

    Meanwhile, increasingly sophisticated point-of-sale (POS) systems now include tools like comprehensive data collection — many of which are capable of identifying patterns that might hint at theft or fraud.

    Mastering Inventory Control

    Rigorous inventory control isn't just about keeping your customers’ favorite products in stock. With real-time monitoring, retailers can swiftly pinpoint all kinds of discrepancies, whether from theft, administrative errors, or any other challenges that might arise.

    Indeed, the mere knowledge of careful inventory oversight, in and of itself, can often deter potential thieves — when both staff and customers are aware that items are closely monitored, opportunistic theft is no longer quite so easy.

    Moreover, by routinely analyzing inventory data, patterns of shrinkage may emerge. For example, recognizing that a specific product is frequently missing can suggest that it may be time to implement some enhanced security measures for that item.

    Ultimately, the power of inventory control lies in its dual role as both a preventive measure against theft and a diagnostic tool for identifying losses.

    Loss Prevention Strategies in Ecommerce Spaces

    We all know ecommerce has revolutionized the way we buy and sell. But just like physical storefronts, this world of virtual carts and instant checkouts also comes with its own set of vulnerabilities.

    It’s imperative for brands to adopt strategies that not only cater to the convenience of online shopping but also address the unique challenges it presents in terms of loss prevention.

    Here are a few smart ways businesses can help protect themselves online.

    Prioritizing Data Accuracy

    This piece has already dug into how data collection can go a long way in helping to identify patterns of unexplained retail loss. Of course, those numbers won’t do any good if they’re not accurately reflecting the state of your business.

    While these inaccuracies often stem from innocent data entry errors or outdated information, the repercussions can be serious. Beyond lost sales alone, brands might face issues like alienating potential customers and can also complicate efforts to identify when “the numbers are off.”

    To navigate these challenges, it’s essential to adopt standardized processes and streamline data management, often with tools like automated data entry systems or product information management (PIM) solutions.

    Employing Artificial Intelligence (AI) Programs

    Artificial intelligence (AI) can do a lot more than simply improve your customer’s shopping experience: It acts diligently — and in real-time — to identify suspicious purchases and other questionable patterns before they snowball into full-blown disasters.

    These systems leverage machine learning and deep-dive data analysis, and — depending on its findings — transactions might be flagged for further review, outright rejected, or seamlessly approved, ensuring an overall smooth purchase experience paired with robust security.

    Combating ‘E-Fences’

    The rise of online marketplaces has inadvertently fueled the practice of “e-fencing,” a modern twist on a timeless criminal tradition: The reselling of stolen goods. Platforms like eBay and Amazon can offer a degree of anonymity that is particularly attractive to these kinds of scammers.

    Beyond the obvious financial downsides, unprofessional or unreliable resellers can also easily cause all kinds of reputational damage to your brand, even with once-devoted customers.

    Retailers need to be proactive in collaborating with these platforms to quickly flag suspicious listings. In more severe cases, legal action may need to be pursued against persistent e-fencers. Educating consumers about the risks of unverified online sellers can also go a long way in deterring such purchases.

    Some brands have even embraced advanced techniques like packaging their products with radio-frequency identification (RFID) tracking tags, which can easily track and identify stolen goods. 

    Keeping Everyone Honest

    While it’s not great to think about needing to protect your assets from bad actors, for better or worse, it’s both a fact of life and, oftentimes, simply the cost of doing business. Try not to take it too personally.

    Luckily, with a proactive approach, many businesses can greatly reduce retail loss year over year — and hopefully pass those savings onto their customers. 


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    Written by: Chris Caesar

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