Retailers walk a tightrope – balancing customer experience with protecting their bottom lines. One major threat to profitability? Inventory loss, aka shrinkage.
A prime example is Lowe’s reporting shrinkage worth $997 million in fiscal 2022. That’s a significant chunk of potential profits disappearing!
This blog dives deep into retail loss prevention: what it is, why it matters, and how you can implement effective strategies – including digital audit tools – to safeguard your store and keep your profits healthy.
What is Loss Prevention in Retail Stores, and Why Does It Matter?
Retail loss prevention (aka inventory loss prevention) refers to strategies applied to minimize shrinkage – the difference between inventory records and the actual stock. This discrepancy can happen due to various reasons, including:
- Operational losses due to equipment failure, accidents, etc.
- Administrative errors during inventory counts or ordering
- Theft (shoplifting or employee theft)
- Cash handling issues
- Damage to products
- Vendor fraud
Stock loss prevention in retail is crucial as it directly impacts profits. Also, effective loss prevention strategies deter theft and create a safer working environment in retail for the staff and customers.
The Alarming Rise of Retail Shrinkage: How Much is Really Being Lost?
Losses in the retail industry are a matter of concern as they have been worsening over time. According to the NRF’s 2023 National Retail Security Survey, shrinkage reached a staggering $112.1 billion in 2022 in the US. This translates into an annual shrink rate of 1.6%, or 0.2% higher than FY 2021.
To put this in perspective, imagine a supermarket chain with annual sales of $20 million. A 1.6% shrink rate leads to a loss of over $320,000! This directly impacts a retailer’s ability to invest in staff, improve the shopping experience, or even stay competitive.
Retail Loss Prevention Strategies & Tips
Here are the top 5 strategies to prevent stock loss in retail we’ve seen successful businesses implement.
1. Strengthen Inventory Management
Implement inventory management best practices to track stocks from procurement to sale. Here’s how you can fortify your inventory management:
- Regular Cycle Counts: Frequently targeted counts provide real-time stock visibility, allowing you to catch discrepancies before they become major issues.
- Barcode Scanning or RFID: It tracks stock throughout the journey, minimizing human error and ensuring data accuracy.
- Inventory Management Software: It allows you to set reorder points and avoid stockouts, reducing the amount of exposed inventory.
By combining these strategies, you gain greater control – regular counts and scanning provide precise data, while software ensures optimal stock levels.
2. Improve Systems and Technology
This includes technology and systems designed to monitor retail operations and keep losses in check.
Modern video surveillance systems leverage video analytics to detect suspicious behavior. Facial recognition can prevent retail store theft by identifying known shoplifters, while heat mapping can pinpoint areas with high traffic and potential theft risks.
Digital inspection apps like GoAudits allow you to create digital checklists for tasks like store opening/closing procedures, cash register audits, and security checks. Additionally, it can help you implement corrective actions to avoid violating business policies.
GoAudits also offers real-time reporting and an analytics dashboard through which you can identify recurring issues like theft attempts and undertake merchandising efforts accordingly.
Here’s what Kartella Fuller of Goodwill has to say about GoAudits:
GoAudits gives us consistency in collecting data, setting up action plans, and driving their execution. Ultimately, we are much better equipped to improve results in our business operations.
3. Empower Your Employees
Employees are often the first line of defense against retail shrinkage. But, how can you empower them to actively participate in asset protection and loss prevention?
Implement regular training to help staff identify suspicious behavior and handle situations effectively. Train them in recognizing shoplifting techniques, proper bag-checking, and de-escalation tactics.
Equip your staff with accessible retail SOPs in the form of digital standard checklists. They provide a clear roadmap for daily operations, ensuring consistency and reducing the risk of human error.
With GoAudits, you can build your own checklists and categorize them based on location, department, tasks, etc. Your staff can access these checklists on their mobile or tablet devices.
With GoAudits we save at least 20 hours a week across different users, especially writing action plans, as now everything is done in one place.
Kartella Fuller, Director of Operations & Guest Experience, Goodwill
Audit Checklists That Can Help You Prevent Shoplifting and Retail Losses
Here are free digital retail store audit checklists that you can use to train your staff and enhance stock loss prevention in retail stores:
- Loss Prevention Audit Checklist
- Product Inspection Checklist
- Retail Safety Audit
- Store Safety Checklist
- Visual Merchandising Checklist
- Store Opening Checklist
- Retail Store Closing Checklist
- Retail Store Inspection Checklist
- Store Maintenance Checklist
- BOH Photos Checklist
- Monthly Shop Review Checklist
» Use These Checklists: Sign up with a 14-day free trial to try them.
4. Engage Customers in Retail Theft Prevention
Engaging customers can subtly deter theft and retail losses. Informative signage, strategically placed throughout the store, can educate customers about security measures without creating a tense atmosphere.
Loyalty programs reward honest customers, fostering a sense of community and investment in the store’s success. Well-designed and engaging displays allow for better product visibility, making it harder for shoplifters to conceal items.
Effective merchandising techniques can prevent theft without sacrificing an inviting shopping experience, for example, keeping high-theft items within staff view. You can also use a merchandising checklist to strengthen retail asset protection for your stores.
5. Conduct Regular Audits, Identify Trends, and Take Action
Regular store audits offer comprehensive reviews of inventory, sales data, and security protocols that highlight areas of vulnerability.
By analyzing trends in shrinkage data, you can identify patterns and pinpoint products or locations most susceptible to theft.
Based on trends, you can take targeted action, like adjusting security measures or staff training, to address specific challenges.
Digitize Your Loss Prevention Audits in Retail Stores
Digital inspection apps, like GoAudits, offer a user-friendly tool to streamline loss prevention audits. Your staff can
- use easy-to-access digital checklists
- add comments and take photos of the discrepancies and non-compliance
- suggest and assign corrective measures
- generate audit reports in a single click, giving you real-time insights into potential vulnerabilities
You can track past audit scores, reports, and team performance to assess the effectiveness of your retail security and loss prevention strategies. You can also monitor the status of the corrective actions without paying extra for the non-user assignee.
Adding loss prevention audits to your existing program is simple. Pre-built audit templates and easy customization offered by customer support ensure a seamless fit with your current retail practices.
Working with GoAudits has been very easy. The Support Team has been helpful during the onboarding and overall responsive to any needs or inquiries. A pleasure to deal with!
Myles Blue, Area Manager, Body Energy Club
With a rating of 4.7 stars on Capterra, GoAudits is trusted by some of the biggest names in the retail industry.
» Customer Success Story: How businesses leverage GoAudits to save time and improve operations.
