Loss Prevention, Retail Shrink, and Five Strategies to Prevent It

Today, every major retailer has a loss prevention (LP) department. With the tens of billions of dollars lost every year to external and internal theft, they must.

As we described in another post, these thefts are typically referred to as retail shrink. The products were ordered, but not all of them found their way into the hands of paying customers. The rest somehow disappeared.

While employee theft is a leading cause of retail shrink—we do not want to start pointing fingers in the wrong direction—it is not the only cause.

Shrinkage can also be the result of some type of fraud, usually in the supply chain, vandalism, waste, operational errors, miscounts, inaccurate vendor shipments, as well as poor receiving and delivery practices within the retailer’s chain of stores.

So how are most LP departments dealing with loss prevention and retail shrink?

If the other possibilities have been eliminated, then they must assume retail shrink is the result of shoplifting. Among the steps to decrease or eliminate shoplifting are the following:


Closed-circuit cameras are now installed in virtually all retail establishments, large and small. These are designed to be able to queue in to just about every corner of a store.

And, CCTV systems not only keep their eyes on shoplifters, but they are also just as useful for uncovering internal theft by store employees as well.

RFID Systems

Radio frequency identification systems can be traced back to World War II. Germany used them to help identify whether military aircraft flying within its borders were German or Allied. Since then, they have served a variety of military and civilian purposes. Beginning in the 1990s, the technology was first used in stores to determine if, quite literally, merchandise was being walked out the door. Having a state-of-the-art RFID system is now a requirement for all retailers.


Retailers are advised to conduct random merchandise audits. Merchandise audits are not only on the lookout for retail shrink, but they are also one of the best ways to determine how well a store is doing, what is selling and what is not selling. Audits also help determine if retailers have the right pricing strategies in place, merchandise placement is working, and what merchandise needs to be reordered.


CCTV cameras cannot see everything. Store employees need to fill in the gap and be trained on how to identify shoplifters. For instance, while there are certainly many “lone wolf” shoplifters, most work in groups of two to five people at a time. Instead of discreetly placing a stolen piece of merchandise in a purse or a pocket, very often shoplifters make their way into stores carrying large shopping bags. They are in the store for a reason —to shoplift—and want to make sure they have a place to put all they are planning to take.

Employees trained to identify shoplifters learn about these and many other techniques shoplifters often use. This can prove incredibly useful at eliminating retail shrink.

 Contingency Plans

Even with these and many other steps in place to help eliminate all kinds of theft and shrinkage, LP departments must also have what we can call a “contingency plan.”

A contingency plan typically refers to calling in an organization trained in the various aspects of retail loss prevention. They help LP departments determine what is happening and why shrinkage is occurring.

View these organizations as business partners. They are there to help identify risks, remove them, and help ensure retailers remain as profitable as possible.  To learn more, Talk to Us.

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Be sure and attend our FREE Webinar on Crime Prevention & Its Complexities in a Retail Environment will be held on Thursday, May 25, 2023, at 11 AM Pacific Time, 2 PM Eastern (US and Canada)

To register for what is sure to be a fascinating and educational webinar, click here: https://zoom.us/webinar/register/WN_MY6jt6B2RdyuQlL9wcE1lg

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