Loss prevention

Retail loss prevention is a set of practices employed by retail 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". Deliberate human actions that cause loss to a retail company can be theft, fraud, vandalism, waste, abuse, or misconduct. Inadvertent human actions attributable to loss are poorly executed business processes, where employees fail to follow existing policies or procedures - or cases in which business policies and procedures are lacking. Loss prevention is mainly found within the retail sector but also can be found within other business environments.

Since retail loss prevention is geared towards the elimination of preventable loss and the bulk of preventable loss in retail is caused by deliberate human activity, traditional approaches to retail loss prevention have been through visible security measures matched with technology such as CCTV and electronic sensor barriers. Most companies take this traditional approach by either having their own in-house loss prevention team or using external security agencies. Charles A. Sennewald and John H. Christman state, "Four elements are necessary for a successful loss prevention plan: 1) Total support from top management, 2) A positive employee attitude, 3) Maximum use of all available resources, 4) A system which establishes both responsibility and accountability for loss prevention through evaluations that are consistent and progressive."

Periodically a retail business inventories all of the merchandise in the store. 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.

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. 80% of customers who steal merchandise are opportunists and do not walk into the store with the intent to steal. 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.

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Wikipedia