Retail Loss Prevention in the Age of Online Shopping

By September 18, 2017 Retail Loss Prevention

 Retail Loss Prevention

Retail is diversifying and moving away from its traditional brick-and-mortar domain; retail loss, we think, will also evolve, and so, naturally, will retail loss prevention (LP).

As retail continues to evolve, it is reasonable to assume that while many retail outfits will be a combination of stores and online, the future could be that the majority of retailers will only have an online presence. But even with only an online business model, there are still many of the traditional retail loss prevention challenges that we face today. An online retailer will have a fulfillment center where it houses its product and have people working. Just like current retail distribution centers, these fulfillment centers will require LP programs that include access control, product protection, safety procedures, internal and external theft protection, loss prevention awareness training, cargo protection, a Business Continuity Plan (BCP), evacuation and “shelter in place” protocols, perimeter protection (the yard where delivery trucks are parked and operated), CCTV, audits, inventories, etc.

The retailer of the future will probably have corporate offices and/or call centers in a different location than their fulfillment center and will therefore have to protect those facilities, too.

Another interesting recent trend is of “pure” online retailers putting up “pop-up” stores that require a ‘traditional’ loss prevention strategy. Just recently, Alibaba, the online retail giant, announced the opening of its first brick-and-mortar facilities in China, following a trend started by Amazon, with its procurement of the Whole Foods chain.[1]

Looking at the two supposedly opposing trends, it seems that the future of retail is even more complicated than expected. It includes a dynamic integration of online and offline capabilities for the purpose of maximizing the advantages of each modality; if the trend shows itself to be a successful one, retail loss and retail LP will follow suit and learn to provide a proactive approach to loss control, matched by a hybrid loss prevention solution that will combine innovativeness and flexibility, and tech-savvy operators with the ability to successfully bring on board a host of new technologies. The retail industry needs to make sure they are investing their money into the correct areas of the business if they want everything to stay afloat and profitable, this could be purchasing durable technology from, or maybe even making super sure that they are ordering in the correct amounts of stock!

Theft can occur at fulfillment centers by employees or visitors (e.g., truck drivers) or off of trucks in transit,or product could be under-shipped; for example, where you sign for merchandise that you did not actually receive. Monitoring software needs to be put in place to identify inventory discrepancies throughout the entire logistics process, be it as part of the shipping of items to stores by a fleet of trucks (which can be monitored with Lytx software) or the products themselves once they are in the stores.

Seamless tracking of product will be a major future challenge. Every item will have an individual identifier (RFID) and will be tracked from the moment it is received until it is in the customer’s hands. Video software will become more intelligent and will identify exceptions (e.g., an emergency exit door left open and unattended).

Tomorrow’s LP professional will need to be very computer literate, have a thorough understanding of the online world and understand how to control loss in that online world. Virtual transactions, after all, will still generate fraud (e.g., bad credit cards and fraudulent returns). Credit card companies and retailers alike will have to integrate additional credit card fraud protections into the online ordering software. Suspected fraud needs to be identified and reported to LP for investigation. Furthermore, the future retail LP professional will have technology (hardware and software) that will provide exceptions that require action. In the world of “big data”, effective technology will provide only actionable intelligence and screen out the rest. That way, the retail LP professional will be able to remain always focused on what needs to be addressed, not spending time trying to find the exceptions themselves by scrolling through data. This will enable them to provide effective loss control and employee safety while supporting the success of the retailer’s business model.

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