As a small business owner, you probably put a lot of thought into how much inventory to buy and how to price it in order to make a profit. When loss occurs, it can really cut into your profit margins or even cause you to raise prices for your customers. The right loss prevention strategies can help you protect your bottom line and your customers' best interests as well as set you up for a more stable presence in the marketplace.
Role of Loss Prevention
Loss prevention efforts include anything you do to keep others from taking goods, services or intellectual property without paying for them. This is important in order to keep your business from absorbing undue expenses that could weigh you down or even cause you to go out of business. Loss prevention includes things like signage, mirrors, inventory management, point-of-sale systems, RFID, cameras and loss prevention officers. It also includes things like trademarks and proper patenting to protect your intellectual property.
Loss prevention efforts are preventative efforts that help safeguard your business from having to come up with reactive strategies to address things like:
- Missing merchandise
- Stolen ideas
- Lost money
These are things that can cause quite a bit of panic, especially if your budget isn't set up to absorb the shock. You can help to avoid this kind of stress and budget crisis with a bit of forethought and planning.
Retail Loss Prevention Strategies
Retail loss prevention strategies are typically multifaceted and tackle the problem from multiple angles. For instance, you might arrange your store so that there is a great deal of space between displays so it is easy to see your customers at all times.
It might also be wise to put small items that are easily stolen, such as jewelry, near the register where retail staff can keep a closer eye on things. Dressing room policies might include locked doors and cards that indicate the number of items a customer is bringing into the dressing room.
Communicate With Signs
Many retail loss prevention strategies include signage that helps with loss prevention and informs customers of policies. Signage can include any of the following:
- Signs indicating that you prosecute shoplifting
- Signs informing customers of video surveillance
- Signs conveying dressing room policies
- Signs preventing customers from bringing merchandise into restrooms
- Signs alerting customers to loss prevention officers on the premises
Some stores find it most effective to utilize clear signage in bright colors and with bold lettering. Other retailers prefer loss prevention signage that fits their store's branding and color scheme.
Use Mirrors Strategically
Even when you arrange your store strategically with open spaces between displays, you will probably still have some blind spots with which to contend. Stand at your store registers and keep an eye out for areas you cannot see clearly. Then, position yourself in different places throughout your shop to see where there might be blind spots from different angles.
You can utilize mirrors strategically throughout your space to help you visualize any blind spots you discover. Consider strategically placing dressing room mirrors so that they help you visualize the back of the store. Angled mirrors in corners can help you get a better view of the back side of displays, while domed ceiling mirrors help provide 360-degree views between aisles and throughout your store.
Point-of-Sale and Inventory Systems
Most small business owners see their staff as partners in loss prevention, but this is not always the case. Sometimes, employees are the ones involved in the theft of goods or money. You can use your point-of-sale system to help make internal theft difficult to impossible. Look to include the following features in your POS system:
- Manager tools can highlight unusual credit card patterns, voids and discounts.
- Staff permissions require unique logins and manager involvement to do returns or offer special discounts.
- Inventory analysis allows you to align trends with staff members.
In addition to a solid POS system, your business needs to conduct regular third-party inventories, limit activity in your storage areas, label storage areas clearly and automate as much as possible.
Using Security Tags
Many businesses find that security tags help to prevent loss. Some large and bulky RF or RFID tags set off an alarm as customers walk out the door with an item for which they haven't paid. Other tags, used primarily for luxury items, are so small that they are undetectable by the customer.
These tags sometimes include product information and can help as an alert for a fake designer product if a customer tries to return it for a refund. If the product is scanned and no chip is found, the store employee can assume it is not authentic and refuse the refund.
Install and Use Cameras
Video cameras can be powerful allies in your quest for loss prevention. They can help security staff see theft before a suspect leaves the store, aid in suspect identification after a crime and provide evidence in a court of law. Video cameras can also be useful in the event of an employee accident or a customer who falls and gets hurt. Some stores even use AI cameras that can identify when an item passed a store scanner without actually being scanned.
If you use cameras as part of your loss prevention program, ensure you are aware of the laws surrounding recording in your state. You should also seek information about where you are and are not allowed to place cameras. For instance, cameras are not allowed in bathrooms and some other areas of a retail space.
Loss Prevention Officers
Third-party loss prevention officers are an excellent way to add extra security to your business if the budget allows. They are specially trained to spot internal and external theft and other security threats. For instance, they might be able to identify an employee who is engaging in theft at the register and also catch shoplifters or those trying to falsely return merchandise.
Sometimes, loss prevention officers are also positioned near restrooms or other areas where you do not let employees or customers bring merchandise for which they have not yet paid.
Intellectual Property Protection
If you are a small business owner whose business is developed around a special name, specialized terminology, writing or new inventions, be sure you account for intellectual property protection. Utility, provisional, plant and design patents can help ensure safety for your designs and inventions.
Arbitrary, suggestive, descriptive and generic trademarks can help to protect names, logos and terminology against theft. Copyrights protect written work and ensure you are the only party legally able to publish, distribute and sell your material.
Loss Prevention Training
Loss prevention training is key for you and your small business employees in order to inform everyone about your loss prevention strategies. These specialized classes can also include elements like:
- Live presentations
- Practice scenarios
Many loss prevention training programs also educate employees about the laws and dangers of internal theft. They train your employees to spot shoplifters but also to prevent loss in other ways, such as following protocol for returns, discounts and special promotions.
- Vend: Retail Loss Prevention: 7 Powerful Tools & Technologies to Help You Reduce Shrinkage
- CSO: Intellectual Property Protection: 10 Tips to Keep IP Safe
- Loss Prevention Magazine: Protective Signage Research Seeks to Determine If Signage Impacts Theft and Customer Behavior
- Loss Prevention Magazine: How Store Environments Affect Shoplifting Crime
- Forbes: Five Ways To Improve Your Inventory Management
- TouchBistro: How Your POS System Can Help With Loss Prevention
- Forbes: Stop Thief! These New RFID Tags Could Help Luxury Clothing Brands Guard Against Theft
- Loss Prevention Magazine: What You Need to Know About Video Surveillance Laws
- The Verge: Walmart is Using AI-Powered Cameras to Detect Theft at Checkout Lanes
- Fast Guard Service: Why You Should Hire a Loss Prevention Officer