Loss prevention in retail

Strategies and technologies for combating shrinkage in stores

09.09.2025

Loss prevention in retail is more important today than ever before. In response to increasing inventory discrepancies, economic uncertainties, and new opportunities for theft, retailers must continually adapt their strategies. This involves not only protecting against theft but also minimizing internal process errors that result in high costs.

Common causes of losses

Losses in retail are caused by various factors:

Operational errors: Unintentional human errors, often caused by unclear processes or insufficient training.
External theft: Classic shoplifting, fraud, or vandalism by customers.
Internal theft: Dishonest actions by employees, ranging from cash register fraud to theft of goods.
Internal losses: Other internal causes such as incorrect price labeling, unrecorded sales, or package theft.

A woman in a blue jacket looks at a shelf in a supermarket while holding a tablet in her other hand; Copyright: Adobe Express

Trend in losses in the retail sector

Studies show that almost two-thirds of retail losses in the US are due to internal process deficiencies rather than organized crime. Understaffing, incorrect price labeling, inventory errors, and inadequate process control cost retailers an average of 5.5% of their sales, and the trend is rising.

However, the EHI study “Inventory Differences in German Retail 2025” comes to opposite conclusions and reveals alarming trends in Germany.

Total losses in 2024: €4.2 billion due to theft by customers, employees, and service staff (2022: €3.73 billion).
Inventory discrepancies: Ø 0.64% of net sales (€495 billion).
Economic factors: High inflation and declining purchasing power increase the propensity to steal.

Cause of damage

Percentage share

Monetary damage (in billion €)

Theft by customers

60 %

2.95

Theft by employees

18 %

0.89

Theft by service staff and delivery personnel

7 %

0.37

Organizational shortcomings

15 %

0.57

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Key strategies for loss prevention

An effective loss prevention strategy must do more than just prevent theft:

Process optimization: Eliminate sources of error in pricing, inventory management, and promotions.
Targeted goods security: Combination of visible deterrents and invisible control mechanisms.
Employee protection: training, clear guidelines, and safe working environments.
Individual solutions: Adaptation to product range risks – especially for alcohol, cosmetics, and electronics. Self-service checkouts require higher security measures.
Cost awareness: Expensive high-tech systems are not always necessary - simple physical barriers and acoustic deterrents are also effective.

Modern technologies for loss prevention

Loss prevention technologies have evolved significantly in response to growing theft risks. Today's solutions are capable of proactively preventing losses while increasing operational efficiency.

Technology

Functionality

Primary use

Advantages

Disadvantages/Challenges

RFID-Technology

Radio wave-based identification of items, real-time current stock levels

Theft protection, inventory accuracy, increased efficiency

Accurate inventory data, reduction of false alarms, automation of processes, traceability in the supply chain

Initial investment in labels and readers, often involving considerable labeling effort if not ex works

AI video analysis

Real-time analysis of video footage to detect suspicious behavior patterns or unscanned products

Proactive theft prevention, monitoring of self-service checkouts, detection of internal losses

Proactive alarms, focus on actions rather than individuals, increased safety for employees, deterrence

Acquisition costs, data protection concerns, requires high-quality video material

Data Analytics & Machine Learning

AI-supported analysis and forecasting of big data, including sales data, inventory levels, and sources of loss

Strategically identifying and preventing causes of loss

Proactive prevention through data-driven, holistic optimization across the entire process chain

High data requirements, complexity in networking data sources, implementation, and necessary system integration

Balancing prevention and customer experience

A screen displays several black-and-white images of a supermarket from a surveillance perspective; copyright: Adobe Express

Loss prevention should not come at the expense of the shopping experience. Locked display cases or cumbersome security measures can reduce sales. However, the perception of security is complex and not universally negative. A study from Austria has shown that although 93 percent of customers notice merchandise security systems, only ten percent find them disruptive. This ambivalent attitude illustrates that it is not the mere presence of security technology that impairs the customer experience, but its implementation. Successful retailers therefore rely on invisible but effective technologies that run in the background. These create security without impairing access to the goods or the visual shopping experience – thus combining economic efficiency with customer satisfaction.

Sources: Wikipedia Retail Loss Prevention, Checkpointsystems Blog RFID, Retail Focus Feature, Isarsoft Blog AI video analysis, LatticeWork AI video analysis, Facit Insights-Article

Portrait of Sven Reck, freelancer for the EuroShop editorial team, in front of a red background; copyright: Sven Reck

Author: Sven Reck | EuroShop.mag

Sven Reck has been supporting EuroShop.mag as a freelancer for several years. Among other things, he creates photo series on store design, writes articles on best practices in retail marketing and use cases on new technologies in the retail sector. He also enters the content into the CMS and ensures user-friendly presentation and search engine optimization.