Shrinkage and Loss Prevention in Retail Stores

Scan & Go systems come with many advantages, but potential loss still worries many retailers. However, with a holistic strategy for loss prevention, shrinkage rates in retail stores can be contained. This article shows tips and measures on how to prevent loss when using mobile self-checkout systems.

Retail crime is, and always has been, among the most serious problems store owners have to face. The average shrinkage rate of retailers in the US is about 1.33 % according to a survey done by the NRF¹ and costs the industry over 45 billion dollars every year.

Naturally, potential loss is also among the main concerns when discussing mobile self-checkout systems (MSCO). And the reason is clear: handing the power to scan and pay for their purchase over to the customers requires a considerable amount of trust – and seemingly increases the risk of shoplifting.

However, with the right loss prevention strategies in place, best practices show that shrinkage rates can be reduced to the average overall value, in some cases even below.

The most effective loss prevention

First things first: effective loss prevention is based on three main pillars:

Overall, the most important measure of prevention is the so-called re-scanning process. Since the most obvious risk in using Scan & Go systems is customers simply not scanning every item in their basket, employees can perform a re-scan of a subset of the purchase to check if all items have been scanned correctly.

This functionality can either be triggered by an employee or an algorithm, which optimizes the selection process based on various parameters, such as basket value or item count. Furthermore, re-scanning can be supported by exit gates or fully autonomous systems like computer vision or scale hardware.

How to prevent retail loss using psychology

Criminal offenses such as theft, fraud, and organized retail crime are punishable by law. Pointing out the consequences of such actions, while also raising awareness for the preventive measures being taken, can have a significant effect on the shrinkage rate in retail stores.

The psychological component thus concerns any kind of communication that aims to encourage customers to complete their purchase the proper way. This loss prevention checklist includes, but is not limited to

taking away anonymity, by having customers register with their personal data, including payment details,
informing them, that they may be called for a random spot check,
asking to double check that all items have been scanned properly,
clarifying that mobile self-checkout is a privilege, that can be revoked in case of willful misconduct,
assisting them in understanding the technology completely, i.e. by implementing tutorials and screen tips

However, statistics show that only a very small group of customers are responsible for a major share of the overall shrinkage – which means most customers behave in an honest way. Thus, a good loss prevention strategy will detect shoplifting without scaring off existing customers by unnecessarily disrupting their shopping experience.

Effective loss prevention technology for retail stores

In terms of technology, there is a number of tools to help retailers who use Scan & Go systems to reduce shrinkage rates in their stores, such as trust scores, spot check algorithms, exit gates, or RFID clouds.

Exit gates/Checkout gates

This strategy allows retailers to lead Scan & Go users through designated exit areas. At these checkout gates, the customers are required to scan their receipts after the purchase in order to leave the store. The selection of the re-scanning can also be handled by the exit gate, so if a customer is selected for a re-scan, the gate will not open until an employee has checked the basket.

Smart Tags/RFID Clouds

With the use of RFID (radio-frequency identification) Clouds, RFID tags of products can be deactivated after the customer paid for them. This way, the shopping experience is a smooth and autonomous one, as the alarm at the exit gates will only go off if they recognize an active RFID tag. Thus, there is no need for employees to assist or to randomly spot check customers.

Loss prevention duties for staff members in retail stores

In addition to the measures listed above, the store team also plays a vital role in loss prevention. Employees who know about common shoplifting techniques, while also being experienced or trained in using the Scan & Go re-scanning functionality, are an invaluable asset to retail security.

With the help of a separate Scan & Go employee app, the staff can keep an eye out for suspicious behavior and spot check customers more efficiently. The app analyzes and sorts shopping baskets based on a number of triggers, such as high-priced items or articles that require age verification. Furthermore, it allows for offline scanning, so employees can check baskets at any time, even if their internet connection is weak.