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Emerging risks alter loss prevention work

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Technology is not just changing the way people shop and buy. It also may be changing the way some of them steal, and the ways that retailers are fighting back.

“We are seeing dramatic changes in the risks faced by retailers, and loss prevention practices and priorities are evolving to meet those challenges,” NRF vice president for loss prevention Bob Moraca said recently. “As criminals find new ways to steal, loss prevention teams are finding new ways to stop them. Increasingly, this is a battle that is focused on technology.”

The state of the battle was detailed in the annual National Retail Security Survey released earlier this month by the National Retail Federation and the University of Florida.

The survey found that theft, fraud and losses from other retail “shrink” totaled $50.6 billion in 2018, up from $46.8 billion the year before. Most of that is still old-school, brick-and-mortar-type crime, the survey found. The biggest losses per incident happened when stores or other facilities were robbed. Those losses averaged $2,885.15 per incident (down from $4,237.02 in 2017). Next were employee thefts at $1,264.10 per incident (up from $1,203.16), and shoplifting/organized retail crime at $546.67 (up from $543.28). But robberies are comparatively rare, and shoplifting/organized retail crime and employee theft together typically account for about two-thirds of shrink each year, the survey found, with most of the remainder coming from vendor or paperwork errors.

But while 43% of the loss prevention executives surveyed said the biggest increase in fraud is taking place in stores, 30% said it is happening online and 22% said it involves multichannel sales, such as those where an item is purchased online but is picked up in a store. And when asked what challenges loss prevention teams have paid most attention to over the past five years, 68% of those surveyed cited cyber-related incidents as the top issue. That compares with 65% who pointed to e-commerce crimes and 51% who cited return fraud, including incidents where items were bought online but picked up in stores. Organized retail crime was cited by 65% and internal theft by 60%.

But online shrink is where online sales once were — a small share of the total, but with the potential for explosive growth. Loss prevention executives are getting ready, with 62% of respondents saying they are seeking analytical skills and 40% seeking cybersecurity skills in new hires.

“These are changing times in retail and that means changes in loss prevention,” University of Florida criminology professor Richard Hollinger said.


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