Insights

Your complete guide to loss prevention systems

May 3, 2022

How do you define what a loss prevention system is?

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. It starts with developing a sound loss prevention policy and continues based on its enforcement.

In this article, we’ll go through everything you should include in your retail loss prevention system.

To see how Solink can help you with loss prevention management, sign up for a demo today.

What is loss prevention?

Here is a simple definition of loss prevention.

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

Loss prevention system: The equipment and people

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

Business security cameras

Having surveillance 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

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.

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).

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.

illustration-alert-on-laptop

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.

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.

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.

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 prevent 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.

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 has been working with enterprises to help them audit stores daily for OSHA violations. To see how we can help you with regulatory compliance, sign up for a demo today.

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.

Get the most out of your video security cameras for an improved loss prevention system

Cameras are a great deterrent for theft. However, not all types of theft are obvious.

To get a better handle on loss prevention, you need to integrate as much data as possible. Solink integrates your cameras, POS, and more into a single platform.

It then shows you what you need to see to identify and eliminate theft. Finally, EBR, case management, and video surveillance are out of their silos and working together seamlessly.

To see how Solink can be a part of your loss prevention system, sign up for a demo today.

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