Insights

Your complete guide to loss prevention systems

July 14, 2023

How do you define what a loss prevention system is?

A loss prevention system is a set of strategies and technologies used by businesses to reduce theft, fraud, errors, and waste to protect profits.

Your loss prevention systems should include the tools you use (and the people using them) as well as the process you have in place. The tools can include everything from the electronic article surveillance (EAS) system at the front of a store to the video analytics platform you use to maximize the value from your security cameras.

Let’s go through everything you should include in your retail loss prevention system and discuss simple terminology.

See what makes Solink the best loss prevention software.

Over 60% of retailers are reporting an increased budgetary focus on loss prevention technology in 2022

What is loss prevention in general?

Loss prevention definition: Loss prevention is a business practice designed to minimize theft, fraud, and waste, helping companies protect assets and increase profitability.

Note that asset protection and loss prevention are sometimes used interchangeably, but there are subtle differences.

Loss prevention is generally focused on shrinkage and theft. Conversely, asset protection is more encompassing and includes reducing all threats to a business, including violence, injury liability, and so on.

Loss prevention systems: The equipment and the people

Different businesses have different security needs. However, most will use some of the following components as part of their loss prevention strategy.

General security cameras

Having security cameras is a great deterrent to loss. The feeling of being watched will make some customers and employees think twice.

The next two items use this same principle.

Employees

Employees can act as a security measure as well. Employee visibility is another great way to reduce losses. Great customer service keeps employees near patrons, which improves sales and customer experience while lowering the risk of theft.

A great video analytics platform

If you really want to reduce loss, you need an active security camera system. Solink’s video analytics platform combined with security cameras finds instances of theft for you (and not just shoplifting, but all the different types of employee theft too).

A cctv camera icon on a blue background.

Using motion search, loss prevention managers can monitor far more recording time than with just cameras alone. This can all be done remotely without ever entering a store.

If you’d like to see how Solink can help you with loss prevention, sign up for a demo today.

To see all the ways Solink can help your business, book a demo today.

Security alarms

Security alarms can come in two types. There are the traditional alarms with sensors and a keypad that protect doors and windows. However, there’s also the new generation of security systems that use cameras and AI to define time and date specific perimeters with “virtual tripwires”. This service can bolster or replace a traditional alarm system depending on the needs of your enterprise.

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Solink Video Alarms Monitoring Service offers this modern type of alarm system. This new technology provides real-time video when an alarm is triggered. The video feed allows the contact person to cancel false alarms before they cost hundreds of dollars. Emergency responders also come better prepared when they know what is happening.

Remote video monitoring capabilities should be part of your loss prevention system.

Physical deterrent devices

There are many different physical deterrent devices on the market. Here are some of the most commonly used devices:

  • Tamper proof packaging that makes putting smaller items in your pocket difficult.
  • Product protection devices such as Keeper Boxes that alarm or set off your EAS system.
  • Locked cases to protect high-target items
  • Sensor-equipped devices (EAS) to trigger gate alarms

EAS loss prevention systems

Sensor-equipped devices, as well as smaller disposable ones that can come preinstalled in some packaging, are only half of this loss prevention system. The other half are readers at the exits to alert staff to possible theft.

EAS systems range from security gates to overhead systems disguised as lights that can run across an entire mall store front.

POS

The POS might be the single biggest point of theft. Cash voids, discount abuse, and more could be happening every day. Furthermore, if your POS is also used as your employees’ punch in clock, then it can also be a point of time theft too. This can be drastically reduced with two actions.

First, you need to make sure your POS is properly secured. Using default codes or turning a blind eye to login sharing are surefire ways to increase the amount of theft at the POS. Employee theft at the POS deserves your attention as a major source of loss.

Second, it is important to link your POS to other data sources so you have a better understanding of what is happening. With Solink, you can integrate your POS and security cameras to quickly find suspicious transactions and watch the corresponding video without a text inserter box.

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Signage

While it might seem small compared to all the technology tools mentioned above, signage is a part of loss prevention management strategy. Explaining the rules and consequences, listing examples, and showing screenshots of theft will keep employees honest and vigilant.

Loss prevention can be a passive secondary responsibility for employees in a store. They are actively helping customers, stocking shelves, cleaning, and so on. Without constant reminders to keep an eye out for theft, it is easy to forget about that additional duty.

Loss prevention officers

Some store locations and products justify hiring dedicated loss prevention officers. In some industries, having onsite security personnel might even be mandated by government regulations.

Loss prevention system: The process

Once you have all the vital people and tools in place, it is time to develop your loss prevention management process. This starts with your policies.

Here are 64 of our best loss prevention tips geared towards every industry.

Draft and share loss prevention policies

You should have a well developed plan that defines what is employee theft and how you will treat employees who are caught stealing. This should be communicated to employees. This might seem straightforward, but there are many instances where an employee might not think they are stealing.

Here are two examples of employee theft, where an employee might not think what they are doing is wrong.

  1. Employees at a quick service restaurant are allowed to bring home cooked food at the end of the night if it doesn’t sell. Employees at 10:50 throw a bunch of chicken in the fryer knowing that they probably won’t sell before the restaurant closes at 11:00. The employees then bring the food home.
  2. Three employees carpool to work together. When they arrive at work, one employee swipes in all three people while the other two get changed into their work uniforms. The third employee then puts on their uniform. All three employees punch in before their shift starts at 9:00, but they aren’t ready to begin working until 9:15.

In the first case, the employees are taking advantage of a work perk by preparing food they know won’t sell so they can bring it home. In this case, the policy might state that, if employees are caught taking advantage of this perk, employees will no longer be allowed to bring home food at the end of their shift.

In the second case, we are dealing with time theft. The loss prevention policy could specify that employees must punch themselves in and they are not allowed to punch in until they are ready to begin work.

stealing time at work

Once you have defined the rules and consequences, you need to make sure that all managers are following the policy when events occur.

Encourage employees to use a theft tipline

Most employees are good people who want to see their company succeed. However, they also don’t want to face retaliation from coworkers who they report for theft. Having a way to report internal theft anonymously is a great way to make employees feel comfortable reporting theft.

Pre-screen applicants whenever possible

Not all businesses have the time or resources to fully screen new employees. This is even more true during the recent labor shortage. However, whenever possible, you should conduct thorough background checks.

Background checks have traditionally been considered important for managers or employees who will be responsible for handling cash. However, the scopes of shrink and fraud are increasing. High-valued inventory is at risk of employee theft and organized retail crime (ORC). Credit card fraud is also on the rise, and employees stealing credit card information can damage your brand reputation.

Trust but verify

You should definitely trust your employees, but not without proper checks and balances in place. The labor shortage has resulted in a lot of companies hiring candidates who may not have qualified previously. In this situation, proper checks and balances to make sure employees are living up to your trust are crucial as part of your loss prevention system.

One such check can be found in how you write your schedule.

Schedule strategically

Having more than one person at the POS will be a major deterrent to either employee abusing their discount code. Similarly, always having two employees counting cash or managing backroom inventory will reduce the chance of internal theft.

On the floor, as mentioned above, great customer service also doubles as a loss prevention strategy. The presence of employees will deter many shoplifters.

A blue circle with the word schedule on it.

Be kind employers

Employees who do not feel valued will be more inclined to steal from work. That’s because it is easier to justify stealing if you do not think you are adequately paid or appreciated by your employer.

While not all companies can increase wages, there are other ways to show employees that you care about them. For example, the manager recognizing a person at every morning meeting for their dedication can go a long way to keeping employees happy.

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Audit your locations

Scheduled audits are important, but so is being able to check on multiple locations every day. One of the reasons many customers love using Solink for loss prevention is that they can click through the camera feeds of all of their stores to see what’s happening. Being able to see how stores operate when you aren’t around gives you a clear picture of each location.

Check all merchandise coming in and out

Make sure that inventory controls are in place to reduce shrink. This starts by checking merchandise against the manifest as it comes in and ends with checking the products as they are sold.

If these basic procedures are not being followed, then it can be hard to know where an item went missing. Was it delivered or not? Did an employee steal it? Were the tags switched by a customer? This makes the scope of any subsequent investigation much larger and less likely to yield results.

Require receipts for returns

Shoplifting from one location and returning the items to another location is on the rise. As organized crime moves into shoplifting and other retail fraud, this is only one of the possible theft scenarios your return desk may encounter. We recently compiled a list of helpful tips on how to spot a shoplifter.

Having a policy in place requiring receipts for returns can help reduce the chance of fraudulent returns.

Speaking of returns, here’s another part of a sound loss prevention process to have in place.

A mobile phone with a credit card and a check mark.

Ask for ID

Most returns are legitimate. However, some people will return items as part of a long fraud campaign where they are using repeated returns to launder money. Companies that have laxed return rules are especially at risk for these kinds of operations.

Requiring ID, at least for cash refunds, is a good way of finding these patterns and putting an end to organized crime occurring in your stores.

Keep products organized

You probably already keep visible areas tidy. Nobody wants to shop in a messy store, and nobody will eat in a messy restaurant. However, stockrooms can quickly become disorganized.

Messy inventory is vulnerable to theft. If managers cannot see missing boxes at a glance, then it is far easier for someone to steal large quantities of merchandise.

This disorganization can lead to more trouble than lost merchandise. Having boxes on the floor or blocking emergency exits can lead to Occupational Health and Safety Administration (OSHA) fines.

Solink offers Blocked Exit Detection. With health and safety fines on the rise, Solink uses advanced AI to make sure your emergency doors remain clear. Now, when an employee inadvertently leaves boxes near the egress, you’ll receive an alert. This handy product can save organizations thousands of dollars per year.

Watch out for modern theft

Shrink comes in many forms, and the causes of shrink are continuing to evolve. One modern form is organized retail fraud (ORC). In perhaps its most brazen form, instead of a teenager stuffing lip balm into their pocket, a dozen adults rush into a store and take as much as they can hold. However, subtler forms of ORC exist, including slowly stealing large quantities of inventory over months and ongoing credit card fraud rings.

Since the threats are changing everyday, you should include research as part of your loss prevention system process.

Security cameras are a powerful deterrent against theft in your store, but not all theft is immediately apparent. To enhance your loss prevention strategies effectively, integrating comprehensive data sources is crucial. Solink offers a sophisticated solution by combining your camera footage, point-of-sale (POS) data, and other key operational inputs into one unified platform. This integration provides you with the critical insights needed to identify and address theft swiftly and effectively.

With Solink, you gain a holistic view as it brings together case management, and video monitoring in a cohesive, streamlined process. This seamless integration allows you to break down the barriers between different security components, ensuring they work in concert to protect your business.

Discover how Solink can elevate your loss prevention efforts by signing up for a demo today.

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Loss Prevention systems faq

Here are some frequently asked questions about loss prevention systems.

What is loss prevention?

Loss prevention is a set of processes used by businesses to preserve their profit, generally in reference to theft.

What is asset protection?

Asset protection is a more expansive form of loss prevention, focused not only on theft and shrink but also liability risk mitigation, violence reduction, and more abstract ways profit is lost to things like unproductive activities.

Is loss prevention important?

Loss prevention is crucial to improving the profit margins of your business, especially in industries such as retail and hospitality where margins can be notoriously slim.

What is another name for loss prevention?

Some people consider asset protection another name for loss prevention, but loss prevention is really the subtask of asset protection focused on internal and external threats.

What are the three types of loss?

There are three main types of loss:

  1. Internal theft
  2. External theft
  3. Operational shrink

What is loss prevention software?

Loss prevention software can refer to many things. In retail, it is usually video surveillance loss prevention software that helps your business find and reduce theft and other forms of shrink.

What is an example of loss prevention?

A common form of loss prevention is reviewing high-risk transactions such as voids, no-till opens, and discounts using a combination of POS data and paired security camera footage to prevent internal and external theft.

What is a loss prevention system?

A retail loss prevention system is a set of measures and technologies that retailers use to prevent and reduce losses due to theft, fraud, and other forms of inventory shrinkage. Retailers implement loss prevention systems to protect their merchandise, employees, and profits from various types of losses.

What is an example of a loss prevention policy?

Loss prevention policies are designed to reduce internal theft by making sure employees adhere to safe operating procedures. For example, employees may be required to get a manager code for all voids.

What are the principles of loss prevention?

According to Retail Insights, the six principles of loss prevention are the following:

  • Prevention
  • Awareness
  • Compliance
  • Detection
  • Investigation
  • Resolution

What is the most common loss prevention technique?

There are many common loss prevention techniques, but the installation of security cameras is probably the most common. Security cameras provide proactive deterrence as well as a reactive support to theft.

What are the objectives of loss prevention?

Loss prevention aims to reduce internal theft, external theft, and operational shrink through a combination of standard operating procedures and loss prevention equipment such as access control and security cameras.

Why is risk mitigation important to loss prevention?

A single slip-and-fall could cost a retailer more money than a year’s worth of shoplifting. For this reason, risk management should be part of every loss prevention/asset protection plan.

To see all the ways Solink can help your business, book a demo today.