Market Trends

Retail Loss Prevention Strategies – Part I


In this blog series, I am going to talk about challenges facing the retail industry and share some strategies for protecting hard won profits while increasing efficiency at the store front. The good news is that there are concrete steps that retailers can take to strengthen their bottom lines no matter what market changes are afoot.

Retail Loss Prevention Strategies – PART I

Retailers Respond to Tectonic Market Changes

It’s not breaking news that the retail sector is moving through a time of fundamental transformation.

Evolving consumer expectations and buying patterns, the explosion of mobile platforms, increased competition from online sellers and general economic headwinds all contribute to an environment that is forcing retailers to rethink how they structure and operate their businesses.

Retailers are responding by developing transformational, albeit complex, revenue growth and customer acquisition models—such as omnichannel, personalization and real-time customized offers to name a few.

These are not trivial undertakings and will take the industry years to implement and perfect. In the meantime, there are some straightforward ways to improve retail profitability that don’t take a complete reordering of process and technology to accomplish.

One area that is ripe for attention is loss prevention. Although not as sexy as the new revenue technologies, loss prevention should be fundamental to any revenue enhancement strategy and can be used as a potent competitive differentiator.

The Case for Loss Prevention

Economic losses suffered by retail organizations due to theft continue to mount. What is more alarming is that the percentage of loss due to employee theft is the largest and fastest growing category, now responsible for almost 43% of all shrinkage in retail.

The amount stolen annually by employees from U.S. businesses alone is a staggering $50 billion and accounts for 7% of annual revenues. These losses are dire given the slim operating margins that characterize the retail sector, which averaged just 3.12 % in the second quarter of 2017.

Infographic: Reduce Employee Theft at the POS

Despite the growing losses from theft, the largest share of technology investment is being directed towards business expansion initiatives.

Although retailers are investing in technologies designed to capture new customers and bolster sagging revenues, they are finding it difficult to quantify the ROI of these investments. In a 2016 A.T. Kearney survey, nearly 60 % surveyed said their company struggles with executing and measuring its ROI.

In contrast, the benefits of loss prevention technologies tend to be much more quantifiable. As retailers scramble to compete for new customers and new revenues, why not preserve the revenues already earned?

In the next post in this series, I will explore the factors contributing to employee theft. Subsequent installments will address strategies for stanching losses from employee theft.

Chris Trytten has over two decades of technical and managerial experience in systems and security at leading companies in Silicon Valley, including positions with Crossmatch, DigitalPersona, Interlink Networks, Apple, Siemens and Amdahl. In his current position as Market Solutions Manager at Crossmatch, he is using his experience serving the Financial and Retail markets by guiding the product and market teams to address the security needs of these industries. Chris is the author of multiple security white papers and articles.
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