Loss prevention and shoplifting are terms that go hand in hand. As a retailer, one of these terms (shoplifting) is likely one of your biggest problems, and the other (loss prevention) is the solution to that problem.

There’s no way around it. Unfortunately, people do steal. So what are retailers to do about it? Loss prevention practices are put in place to help curb shoplifting, as well as other causes of inventory loss. With the holidays and all the shopping right around the corner, having the right loss prevention plan in place is even more critical.

To give you a solid starting point, we put this post together to help you understand what loss prevention is and how you can use it to your advantage to keep your retail business as secure as possible. Let’s get started.

What Is Loss Prevention?

Loss prevention is an umbrella term for the tools and systems a retail business puts in place to avoid losing inventory and revenue. If you’ve ever walked into a store with security cameras, staff by the door or even mirrors in the corner of a room you have witnessed loss prevention measures first hand. These tools help store owners and staff stay at least one step ahead of any potential theft, as well as other causes of lost inventory. In doing so, retailers are taking a significant step towards ensuring the safety and financial health of their business.

Causes of Lost Inventory

Before we get into how retailers can go about using the following loss prevention tips to improve your business operations, it’s essential to first look into the causes of lost inventory. After all, how can you solve a problem if you don’t fully understand what is causing it to happen in the first place?

Lost inventory or retail shrinkage can happen for a variety of reasons. The biggest, of course, is stealing and it cost the retail industry close to $50 billion in 2016. Customers account for about 36% of the loss, but employees can also account for 30% of the loss.

Administrative errors can cause retail shrinkage as well. Having faulty systems in place, mismanaging money, and relying on old technology can often mean that stock isn’t adequately received and inventory isn’t being managed accurately. In short, details are missed and things can fall through the cracks, causing stock to get misplaced, miscounted, and be mistakenly placed in areas that make it more accessible to thieves.

Vendor fraud can also account for a small percentage of retail shrinkage. Vendors may, intentionally or otherwise, bill business owners incorrectly by overcharging or delivering less product than what was agreed to. All of these issues can cause businesses thousands of dollars annually, which is why it’s so important to have a comprehensive loss prevention strategy in place. Fortunately, many of the approaches to preventing shoplifting can also help you curb the other causes of inventory loss.

SEE ALSO: How to Take Inventory For a Small Business: 9 Tips to Kickstart Your Strategy

How Inventory Losses Affect Your Business

One of the most significant problems arising from lost inventory is that a retail business owner can’t profit off of stolen goods. If the shoplifting problem is extensive enough, it can even cause a business owner to raise prices on other items to make up for the loss. When raising prices, there’s always the risk of driving customers away.

All stealing has a negative impact on business, but internal theft from employees can be particularly problematic. Not only does that store lose the profit from the stolen goods, but now time and resources need to be put into hiring a new employee. This extra burden can be a tough pill to swallow for small business owners that are already strapped for time and cash.

Signs of Shoplifting

Shoplifters aren’t always masked criminals, in fact, the best thieves are totally normal looking people that you would never suspect. That’s why you need to stay on your toes and put the right loss prevention strategy in place. That being said, it’s almost impossible to stop all external theft, so be on the lookout for the following signs so you can know when to double down on your efforts to curb stealing really:

Empty Packaging or Hangers
Many times, a shoplifter will only take the item they’re after and leave the box behind for staff to find later.

Inaccurate Inventory Records
If you’re noticing that your inventory records don’t match the physical inventory count in your store, you may be a victim of retail theft. If you’re experiencing inventory loss, it may also be an indicator that you need to keep a closer eye on your registers. Performing pay ins & payouts as well as running daily register reports, can help you quickly identify the source of any losses in your business.

It isn’t uncommon for retail stores to experience return fraud, which can also mess with inventory accuracy. For example, offenders may try to return an item to your store that they purchased (or stole) from another merchant.

It’s Getting More Expensive to Run Your Store
You may not notice changes in your inventory or registers, but you may discover you have less profit after expenses are paid as a result of the loss.

Your Staff Is Telling You Someone Is Stealing
Listen to your staff when they come to you with concerns. They have a different perspective of the store than you do and may see things others could miss. An incentive program can be a powerful way to encourage your staff to speak up.

Sneaky Customers
Customers who want to steal may try a few different tactics to cover their tracks. Looking out for security cameras, covering their faces with sunglasses and hats, starting altercations with staff, wearing baggy clothes, and carrying large bags with a bunch of pockets are all ways that people try to get away with shoplifting. A loss prevention officer should be on the lookout for these signs.

How to Stop a Shoplifter

Now that you have a better understanding of what loss prevention is, and can recognize the signs of shoplifting, let’s look at some of the procedures that experienced retailers put in place to stop it from happening. What follows are some tools to help you out.

Make the Consequences of Shoplifting Public
Make it clear with signs around your business, particularly in areas where thieves frequent like dressing rooms, that your store has a zero-tolerance policy for customers caught stealing and anyone caught will face legal prosecution. This reminds people of the consequences of their actions.

Follow Through with Policies
If your sign says you’re going to call the police when you catch someone stealing, be sure to call. Not following through can give people the impression that they won’t face any consequences when caught. Although it may seem like a lot of effort to call law enforcement for every criminal, it sends a clear message to potential thieves that you will prosecute unlawful activity.

Remind your staff to be aware of their surroundings and customers in the store. They should walk up to all customers and ask if they need assistance. Engaged staff is often enough to make a would-be thief uncomfortable and prevent the theft from happening again. Staff should be accountable to each other and managers to prevent internal theft.

Security Cameras
Unfortunately, managers and staff can’t always be at a store 24/7 monitoring for threats. Having a security system that features closed-circuit television cameras can give store owners peace of mind regardless of where they are. Similar to having your staff roam the sales floor, security cameras can also make shoplifters feel uncomfortable, deterring theft before it happens.

Security Officers
Having a team of dedicated loss prevention professionals (security officers) can help give your regular staff peace of mind and allow them to focus on other areas of their work, like customer service. Loss prevention specialists and loss prevention managers can also be in charge of monitoring those security cameras.

Restrict Where Customers Can Take Merchandise
Some stores won’t allow customers to walk around a store with high ticket merchandise until they’ve been paid for. Others limit the amount of merchandise customers can take into a dressing room. If your establishment has dressing rooms, make sure you limit and count the number of items each customer takes into and out of the dressing room.

Mirrors are a simple security tool that can help staff see what’s going on in a store from multiple angles.

Keep Track of Big Bills
Check every $100, $50, and even $20 bill for authenticity and keep them in a separate but secure location to prevent them from being stolen.
Perform background checks on employees: This has become common practice, but background checks can help business owners see a potential employee’s criminal history and make an informed decision on whether to hire them.

Security Tags
Security tags (also known as electronic article surveillance tags) are standard in clothing stores and can be attached to clothes or shoes with a simple push or pull. However, to remove the tags, a specific device is needed which making it difficult for customers to take them off themselves. These tags beep loudly when passed through security posts. The sound itself can be more than enough to scare off potential thieves.

Move Expensive Merchandise to the Back of the Store
Strategically placing expensive merchandise at the back of the store makes it more difficult for customers to shoplift these items. Depending on the location of your cashwrap, it can make it more difficult for customers to leave the store without being seen by someone or caught.

Confirm the Validity of Vendors
To avoid vendor theft, double-check every payment made and compare the information you’re given from a vendor against federal and state business records.

SEE ALSO: Winning at Loss Prevention (Your Retail Shrink Action Plan)

How a Point of Sale Can Help with Shoplifting

If used correctly, your point of sale (POS) system will be the central hub of your business. From a loss prevention perspective, the primary benefit of a POS is that it helps you manage your inventory. With each sale, your inventory counts are automatically updated, giving you accurate data about your inventory at any point in time. This makes it easy to conduct ad hoc spot-check inventory counts to test for theft.

POS systems also include detailed inventory reports that can help you track inventory trends over time, as well as inventory value. This allows you to spot anomalies that could represent a theft issue. Lastly, POS systems typically record the name of the employees that open and close registers, as well as the expected value of the cash drawer. Should you detect a theft issue, these records can help you figure out who was on the clock when the theft occurred.

What To Do After Someone Steals

Let’s face it. Sometimes, incidents happen, and a customer turns out to be a criminal. Even with all of these measures in place, nothing is going to be a 100% guarantee. After you find that someone has stolen from your store you need to reassess everything and conduct internal investigations or audits of your systems and processes. Make sure all of your merchandise and money is accounted for, switch to a more powerful POS, carefully choose what you need to put in place for the good of your business moving forward.

If a patron is caught stealing merchandise from your store, make sure you apprehend them lawfully. Shoplifters must be outside of your store before you can convict them of shoplifting, and the force used to stop them must be reasonable.

If your loss prevention team is too forceful, you could face legal action for injuring someone.
Once your team has caught the shoplifter, call the police. Calling the police and having someone arrested sends a clear message to others that you are an owner who does not take shoplifting lightly. That alone can deter people from stealing from you altogether.

A small retailer’s day-to-day is already tough without having to worry about shoplifters or employee theft. Luckily, with the right tools and a comprehensive loss prevention strategy, you can quickly identify these issues and curb them before they damage your business.

Kori Williams ShopKeep Content Writer

Kori Williams

Content writer, Kori Williams, brings a love of grammar and a journalism background to ShopKeep, a leading iPad point of sale system, to create relatable business and POS content.