The modern retail loss prevention/risk management function can be described as a multifaceted role that, to achieve sustained success, requires a multifaceted approach. Fundamentally, it is a hugely influential and important role that has the potential to deliver significant savings to the company’s bottom line if performed to its full capacity. In recent times, the role of loss prevention has shifted dramatically, moving away from the reactive, such as catching shoplifters, into a more proactive methodology, such as increasing staff awareness towards business loss.

There are four words that have largely encapsulated the author’s loss prevention journey to this point. These words (accompanied by the English Dictionary meaning) are:

  • dynamic – energetic, active, potent
  • inspire – stimulate a person towards creativity
  • message – a mission or errand
  • process – a course of action or proceeding


Retail is a wholly interactive, dynamic environment. Put another way, retail is people serving people for every minute of every viable hour of trade. Ultimately, however, retail is about generating sales. In such a demanding service environment, more than ever it has become vital for retailers and their employees to rise to the challenge of enticing more customers through the checkouts, while at the same time mitigating shrinkage/wastage and causing minimum disruption to the core business of selling merchandise.

Unfortunately, the flipside of retail is loss. Loss, in the form of shrinkage, can cost companies dearly. In its most effective form, shrinkage can be managed and controlled down to a narrow point, but it is never completely vanquished. At its most destructive, shrinkage, if managed improperly or undervalued, has the potential to negate profits to the point where a retail store or company can be altogether shrunk out of business.

Enter loss prevention. Although a non-sales function, any dedicated loss prevention person worth their salt should recognise, if not outwardly embrace, the ideology of a dynamic retail environment. Adopting a dynamic outlook (energetic, active, potent) will inspire staff cooperation and convey the loss prevention message across all levels of the retail business. The loss prevention officer should be dynamic, even if he is the only person in the room who is. Almost without exception, following a store visit from a certain dynamic Star Retail Group general manager, that store’s daily sales figures increased significantly against the sales trend.


On the surface, the prospect of inspiring people, particularly in a loss prevention context, is enough to fill most people with dread. However, the concept has a definite place in the loss prevention lexicon, having the potential to hugely impact company shrinkage. When a person or, more importantly, a group of people become inspired, big things start to happen. An inspired employee will spread the loss prevention message to others, creating the potential difference between a good shrinkage result and an exceptional one.

The path to inspiration begins with the following steps:

  • In retail terms, inspiration can be defined as unlocking an employee’s potential.
  • Unlocking potential involves setting achievable targets, then challenging and supporting staff at regular intervals to meet and eventually surpass shrinkage objectives.
  • An employee who regularly achieves set shrinkage targets is no longer a follower – he becomes a leader – a key company asset who will pass on his learnings to other staff.


Every loss prevention officer should consider his personal loss prevention message. The author’s message is ‘accountability’, which he wears like a second uniform whenever he is on the job.

When conveying the loss prevention message, practise the three C’s – calm, caring, confident. The message should be prevalent in body language; it should be conveyed in every word and action. In that way, staff will never doubt or become complacent about the loss prevention person or his role in the organisation. Practising the three C’s inspires trust, which in turn encourages self-reporting of internal and external theft. Additionally, it promotes initiative, because staff no longer fear being censured.

Process: What is Measured can be Managed

Process is undoubtedly the mother of all invention – or in this instance, loss prevention! In any dedicated loss prevention role, knowledge of shrinkage and the way it trends becomes a critical component in determining the root cause of almost all major company shrinkage. Once the root cause has been identified, a policy initiative can then be rolled out to combat the shrinkage at its source. Effective process builds excellent team culture, which has the capacity to limit and ultimately control all aspects of business loss.

Although there are many ways to measure shrinkage, the most important information tool may be right at a company’s fingertips – inside its electronic database.

Key Shrinkage Strategy

Any key shrinkage strategy should, at least in part, be reflective of the following measurement parameters:


  • stock take results
  • daily/weekly/monthly (transactional reports)
  • loss prevention audits


  • departments
  • stores
  • regions


  • quarterly
  • seasonal
  • yearly


The following summary emphasises the key points of this article:

  • Loss prevention is a multifaceted function, which requires a multifaceted approach.
  • Retail is a wholly interactive, dynamic environment.
  • A loss prevention officer should be dynamic.
  • When employees become inspired, big things start to happen.
  • Every loss prevention officer should have a message that is relevant in today’s loss prevention environment. The message should be something that defines him in his role.
  • Building trust and cooperation in a team environment involves the three C’s: calm, caring, confident.
  • Effective process, on the back of thorough research, can limit and, to an extent, control all aspects of business loss.

Darren Egan has 15 years of experience in the loss prevention field. He is employed by the Star Retail Group, a Western Australian company, as the Group Loss Prevention Manager. Darren can be contacted via mail to 37 Ewing St, Bentley WA 6102; attention: Loss Prevention Manager.