The first instances of dedicated loss prevention, or ‘security’ programs being used by retailers dates backs to the early 20th century where there was largely a culture of secrecy aligned to them. This was primarily due to their core objective of ‘catching’ dishonest employees or customers.
For many retailers, limited change in terms of evolution or maturity within their Loss Prevention program has taken place since the start of 20th century. Many retailer’s Loss Prevention programs are still focused on the issues of theft, either by staff or customers, as their sole contribution to their organisation’s efforts to reduce the impact of shrinkage on their profit.
This arguably is in direct contrast to the wider retail industry which has evolved dramatically, particularly during the last 20 years. For example, core functional areas such as Human Resources, IT, Merchandising, Marketing and Supply Chain have all matured in their approaches thereby broadening their value propositions to retailing. More importantly, they have seen that they had to operate outside their traditional thinking and approaches to truly support Retailers. What that said, for a few fortunate Retailers, significant maturing has taken place in their Loss Prevention programs since the start of the 21st century and this maturing has resulted in significant improvements within their shrinkage. See Figure 1.
Fortunately, there is a clear path in terms of maturity levels that a Retail Loss Prevention program can progress through. And whilst there are distinct differences in each of these levels, it is important to understand that the program does not fully cast aside the operational requirements of the less mature levels. In fact, a key indicator of success is that whilst the mature program is judged less on the ‘younger’ program’s requirements, it in fact, finds that the fulfilling of these requirements is much easier.
Level 1 – catching the bad guys
A key driving characteristic of a program within this stage of maturity, is that it is largely reactive in its approach and the most talked about and engagement relates to the topic of catching and prosecuting of dishonest employees and customers.
Other characteristics that may be present include;
- Input may be sought in relation to the physical security of stores and other facilities, however, this is usually reactive only;
- Their primary and in most cases only internal interface (not business partner or stakeholder) is retail operations and to a less extent, the Warehousing and Distribution department (not Supply Chain);
- The most frequent topic of conversation with members of other departments within the organisation revolves around ‘how many crooks have been caught’.
Unfortunately, a function operating at this level, more than likely, finds it very difficult to be heard within the organisation when raising, sometimes very relevant concerns.
Level 2 – risk and compliance
Within this level, a program has developed and implemented some form of ‘audit’ or ‘compliance’ base assessment program. However, it is largely targeted towards the retail stores and is very ‘security’ based in terms of cash register and safe disciplines, key control etc, and a perception of Loss Prevention being there to ‘catch people out’ is largely felt by those who are the subject of the audit.
Some more notable characteristics include;