What is the role of retail loss prevention? What may seem to be a simple question has grown increasingly more complicated as various functions, philosophies, tasks, and responsibilities are debated by the LP community, those who we serve, those who support us in meeting our goals, and those outside the retail circle who draw their own conclusions based on what they see, hear, and experience.
Often the dialogue can focus on the variables that distinguish a specific approach to the role, such as the methodologies of a particular retailer. Other times we fall back on the common vernacular—to reduce losses and shrink. But even this falls short of truly describing the role as it has evolved over the past decade. Sure, that answer is more advanced than what was valid in the past—to stop theft. But it still doesn’t accurately portray how far we’ve come.
More succinctly, the role of retail loss prevention is to enhance the profitability of our companies, just like every other role in retail. Reducing losses and shrink was, is, and will always be a critical aspect of that role. But as the industry has continued to evolve into a wide-ranging profession, the role continues to develop as well; taking us down a more global path with broader responsibilities and higher expectations. Where we are today is only the beginning.
The recent past has seen a wave of growth, changes, and challenges in the retail industry. Yet the common assessment is that this is merely a glimpse of what lies ahead. Retail is rapidly evolving. The way that we shop, the products we buy, and even the way that we pay for goods and services is changing in ways that we never would have expected just a few short years ago.
As the gap broadens between where we were and where we’re headed, our role will continue to evolve as well. But how will it change, and to what extent? What steps can we take to lead the parade, rather than watching it pass us by?
To help us find the answers, LP Magazine canvassed a large number of retail loss prevention executives, solution providers, and other thought leaders to garner their insights and opinions on the subject. We compiled those responses to provide both general consensus and specific views on the ways that they see the role of loss prevention evolving, some of the hurdles that we will face in the process, the skills and resources necessary to power the transference, and how that will drive the future of the industry.
The Impact of Technology in Retail Loss Prevention
Technology is changing society, and society is changing retail. While there were many significant examples identified, in general the rapid changes in technology were seen as the primary driver impacting the role of retail loss prevention in the years to come. This includes both preventing the exposures that new technology may afford as well as how to best leverage technology to combat shrink and loss from all sources.
But the tools alone weren’t at the pinnacle in the minds of most respondents. Rather, it was our ability to adapt to technology that will have the greatest influence on our role. According to one retail leader, “The most significant changes will center on business intelligent tools and, more importantly, how retail loss prevention executives embrace and use them to impact additional parts of the business.”
As complex tools become more commonplace, LP practitioners must adjust, adapt, and develop to understand the utilization of these tools and the overall impact on the enterprise. Awareness isn’t enough, and legitimate efforts must be supported by training and education. This will allow retail loss prevention executives to become even more actively engaged in impacting the profitability of their organizations. “The capacity for an LP professional to adapt to technology trends will define their career. Early adaptors will increase their value while laggards will struggle,” says another retail executive.
The impact of technology will lead to reassessments of a variety of business functions. Technology will drive trends in areas such as mobile POS, emerging selling concepts, and business analytics. Intelligent CCTV systems with analytics technology will continue to have a bearing on how LP performs in the stores, but will take on additional value as part of other retail applications. Use of data and predictive indicators, cloud computing, and business intelligence will enhance processes as well as investigations.
Many also believe that RFID will finally take on a bigger role in effectively managing inventories, from original purchase or manufacture until it ends up in a customer’s hands. This may also expand the role of LP into areas that until now were considered non-traditional, such as energy savings, SKU rationalization, accident reduction, and business continuity.
The emergence of omni-channel retailing as a growth driver will have a substantial impact on the role of loss prevention. As described by one industry leader, “As the retail industry continues to consolidate, increase in complexity, and expand omni-channel solutions, the role of retail loss prevention will change significantly.” Omni-channel retailing will enable customers to purchase what they want, when they want it, how they want to pay for it, and how they want it delivered.
Some retailers are thriving because they have been able to seamlessly offer an omni-channel shopping experience. However, the move toward the infinite store is also creating new areas that need to be secured, such as networks and customer data. LP professionals are increasingly being asked to bring their specific skills into areas where they never participated before, causing a shift in responsibilities.
As an industry, it is critical that we understand how these strategies are being developed. Many new supportive processes lack the back-end systemic controls that prevent fraud. And the evolution of new applications and equipment can have a significant impact if not properly managed. “Retailers are going to continue to find creative ways to conduct business and sell to customers. Loss prevention will need to stay very close to these creative methods and retailing channels to ensure retail loss prevention practices are appropriately woven into the strategies that our merchants and operators develop,” claims one retail leader.
A Wealth of Information
“When it comes to retail, data volume will become massive, and the speed at which data becomes available will increase exponentially and be instantaneous,” suggests a solution provider. “Success will be measured by how it is used by retailers for competitive advantage and higher store performance metrics of all kinds.”
The dual role of increased data and analytics will create a shift in thinking that will change many roles in retail, including LP. The capability to access data and use it to build analytical solutions will drive higher performance for those retailers who manage it with the greatest skill.
We are becoming a real-time world with less and less privacy. Everything we do in public—and even many of the things that we believe may be outside the reach of the public eye—has the potential of going viral and putting companies in the spotlight. This impacts policies and procedures related to customer service, store design, training initiatives, product protection, and other critical business functions. Any and all of these factors can directly impact the brand and influence the business.
While IT has been the primary business owner in most retail companies, participants strongly believe that retail loss prevention must take on an expanded, more proactive leadership role to ensure data is secured and properly managed.
“Breach avoidance and protection of consumer and company proprietary information will continue to be a focal point for retailers for many years to come,” says one retailer. Data breaches are costing companies in many ways beyond the immediate financial losses, to include litigation, brand protection issues, and additional sales impact.
According to another industry leader, “Having the LP organization partnered with the IT security organization will be the most effective way to improve security of both the actual data and the physical devices that collect and manage the data.” This includes coordinating investigative approaches and law enforcement relationships in the event of a breach.
Store Controls and Product Management
“I believe that there will be a significant evolution of the bricks-and-mortar stores that will lead to redesign of every aspect of a physical store. It is already happening in many places,” projects one retail executive. With product moving through different channels, the protection approach, resources, and technology will need to adapt quickly. This will cause a migration of the retail loss prevention program to one that is more holistic in its general approach.
Mobile POS can change shopping patterns, impact sales management, alter register areas, and cause a number of LP concerns. The ability to order product in the store may alter stock levels and physical product carried in the building. All of these developments will require a more versatile and strategic approach in managing risk and loss.
The continued migration of shopping from brick-and-mortar stores to virtual shopping channels will also continue to have an impact on traditional retail loss prevention roles, requiring us to broaden our view to include more non-traditional or non-retail environments. As companies design the store of the future, LP protection strategies will need to evolve with it.
New and Expanded Responsibilities
As the retail landscape continues to change, LP roles will likely evolve in other ways to meet the needs of the business. With Omni-channel retailing continuing to expand the types of fraud will continue to widen; and retail LP will need to adapt to better understand the entire supply chain operation, from systems to processes.
Prevention and response to violent acts in retail unfortunately continues to be a growing issue. Whether it is workplace violence or concerns with potential domestic or international terrorist acts, these issues continue to be at the forefront.
“I see the profession changing into a risk management role; not in the way risk management is thought of today [managing insurance claims], but identifying potential risks to the business, then deploying countermeasures to minimize those same risks,” suggests another retailer.
One solution provider agreed, stating, “Our research findings continue to indicate that there is significant traction available for all-hazards risk management in the leadership space. Many corporate risk mitigation elements, including asset protection, business continuity, compliance, crisis, critical incident, LP, risk, and security have grown organically. We are now witnessing a trend to align strategic initiatives.”
Skills Needed to Meet these Changes
The training and education curriculum of the future LP professional is going to be broader and more business-based. LP leaders will need to be strategic thinkers as opposed to tactical thinkers. There is a greater need to understand the broader context of the overall organization to identify the risks that affect the company. This includes the ability to hold a conversation with anyone in the organization about basic business principles, including sales, finance, inventory management, and technology. As one LP leader suggests, “Education will be key, whether through industry-based educational materials or through formal education and advanced learning programs.”
Greater competition in the job market from more streamlined departments could also lead to increasingly visible skill gaps, suggesting that retail loss prevention professionals must become more well-rounded business leaders. LP practitioners must get ahead of this change through increased education and skill sets. Overall business acumen is a talent set that the LP community needs to increasingly emphasize. We have seen a significant shift in the business acumen of LP leadership over recent years, but this will be far more critical as the pace of change in the business increases.
By the same respect, with technology developing at such a rapid pace, strong and effective training programs are just as critical as formal education programs. This would include sensitivity training, negotiation and communication skills, social media skills, and may include other skill sets that we have largely downplayed in the past, such as active shooter programs and other initiatives. Businesses are increasingly looking for more value from their people. Knowledge is at a premium, and now more than ever before we need to learn as it happens.
This also requires a diverse team throughout the LP organization that can infuse different ideas and different solutions will make any team stronger and more productive. Traditional LP talent will become less marketable and in demand, while analytical capabilities, business acumen, technical skills, and problem-solving at a strategic level will be highly sought after capabilities and backgrounds. A very selective process with regard to the personality and talent make-up of the LP team along with a diverse group of LP personnel that can bridge the digital and physical linkage will be essential.
New Positions that Support Change
Technologically savvy team members have become vital to successful retail loss prevention programs for many years, primarily with respect to exception-reporting, case management, CCTV, alarm, EAS, and the variety of other resources and systems that we use. But as the retail landscape evolves, the LP practitioner must further leverage technology in order to adapt. Industry leaders anticipate that IT liaisons, cyber-security resources, IT experts, data analysis experts, video analytics, data security, and other technical support positions are likely to be a growing part of LP departments moving forward. States one practitioner, “The future of LP is heavily immersed in technology on multiple levels. Tomorrow’s, and quite frankly today’s, LP organization should have those on the team who fully understand and have a working knowledge of that technology.”
By the same respect, hiring specialized subject-matter experts is not enough. There will be a growing expectation that all LP team members embrace technology and quickly adapt to the needs of the business. We need to have people who understand e-commerce and today’s technology from a cultural standpoint. Our teams must embrace and exploit the latest tools, such as smartphones, apps, tablets, and similar resources.
Centralization of Responsibilities
Some predict that we will move closer to centralization of responsibilities. For example, the creation of corporate command centers that enable content experts, such as loss prevention, business continuity, information technology, corporate safety, and field operations, centrally designed to monitor the company. Nontraditional roles may also be included, including meteorologists, sensitivity officers, communications specialists, and social media experts, to name a few.
This command center could combine a multitude of functions and company resources to increase efficiencies, improve productivity, and save expenses. Many also believe that we will see an increase in the chief security officer (CSO) or equivalent role in retail, which would fit into this type of model.
The Leadership Approach
Participants in the survey agreed that a different leadership approach shouldn’t be necessary for one primary reason. As summarized by one retailer, “Simply said, leaders who aren’t currently modifying their approach based on new information and new technologies aren’t leading. Great leaders aren’t managing change, they’re leading it.”
Leaders must possess the ability to work cross-functionally in harmony with the overall business plan. LP executives should be constantly looking for ways to add value. New roles essential to drive business will set the stage for diverse leadership approaches. The days of being the “expert in everything” will fade along with the legacy “silos” that have long been the norm in many companies, giving way to matrix-style organizations with leaders who have a broader scope of expertise and experience.
Everything starts with leadership. We must always be looking for ways to have a “seat at the table” in discussions involving multiple areas of the business. This same thought process really is applicable at all levels of LP leadership. LP directors and vice presidents need to take a strong look at their current LP team, identifying their next generation of leaders. As underscored by one LP leader, “If we’re not interested in learning more about how our team can help drive the business, how can we expect others to see us as leaders?”
Advances in Tools and Technology
“There will be some incredible advances that will cause us to rethink how we operate in retail loss prevention. I believe that fundamentally, technology will be the foundation of almost everything we face going forward,” reflects a retail leader.
These technological advancements should support a proactive approach to the industry as a whole. The volume and accessibility to data is largely believed to be a factor that will revolutionize the decision-making processes and strategies of the LP professional. Data will provide fact-based analysis needed to impact the business and mitigate business losses.
Facial recognition and smart cameras could also be a game changer. All of these advancements will allow us to look at the entire process in an integrated fashion. LP can then lead the transition so we are ultimately protecting all of the assets of the new company.
“The migration away from brick-and-mortar to cyber-shopping will dramatically impact traditional LP roles. Look at the growth of online shopping in the past ten years, and imagine it 10 years from now. Will some type of drone delivery be reality and perhaps criminals intercepting drones be a new mode for shoplifting and theft?” asks one retailer.
Strong Enough to Bend
By the same respect, the rapid pace of these changes also means that the development-to-implementation time is getting shorter every day. As a result, it’s important that we make decisions that are fluent and flexible. Our approach should include living strategies that can be modified as necessary and do not become obsolete as the evolution continues. We can no longer rely on “the way it has always been done” to successfully achieve our objectives.
For example, this means that when the company decides to implement mobile POS, we must work together to identify how to provide protection from the vulnerabilities that we face rather than resisting or opposing the change. We also need to focus on how to better use our LP technology to make the entire company more effective and efficient, such as through the use of our CCTV equipment to enhance customer analytics. Productivity and efficiency are critical as resources continue to be challenged, and we are in a much better place if we’re leading the way.
Partnering with Solution Providers
Collaborative thought leadership that helps us to better understand the tools that are changing retail is an essential aspect of future development. As stressed by one LP professional, “Solution providers are critical to assisting practitioners on emerging trends. Those that proactively adapt to these trends will lead the industry, drive innovation, and add value.” Retail leaders believe that those providers who see the landscape and forecast where retail is headed will be the ones who will have the greatest long-term success.
With the transition to more involvement in the IT aspects of the business, all current and emerging LP products should all be considered part of a technical suite of solutions. As a result, the ability to have solution providers who can help the LP practitioner to best use these resources, educate teams, and facilitate communicate with IT departments will be at a premium.
“As solution providers, we need to be experts in next-generation technologies, as well as experts in next-generation retail loss prevention. We need to apply this expertise and continue to meet and anticipate the needs of our clients by providing them with tools that are cutting edge, and continually evolving,” advises one vendor executive.
Bridging the Gap
Unfortunately, many industry leaders still believe that there is a substantial gap between what retailers need, as opposed to what the solution providers believe they want. This was a common theme echoed by the retail practitioners.
“I am continuously amazed at how little solution providers know about our business and the complexity of what loss prevention professionals deal with every day,” says one.
“Solution providers are in general still trying to sell old technology and not spending enough time on integrating technologies to impact future trends,” offers another.
“We are often presented with solutions that don’t fit the current issues we face,” states still another retailer.
These comments represent a significant area of opportunity. Regardless of whether a solution provider believes that these comments are accurate, these are a common perception that was shared by the respondents. It suggests that LP leadership is looking for true partners are good educators and advisors, as well as students of loss prevention.
As one might expect, there is another side to the discussion. Many of the solution providers surveyed feel that there needs to be progress made on both sides of the table in the development of collaborative partnerships. Like any relationship, it takes effort by both parties.
“We choose how we approach relationships,” says one solution provider. “We should look at everyone with a sense of value. Treating providers as partners [versus simply sales people] is the most important step.”
“If retail loss prevention teams and technology buyers are more open, then their problems may get solved faster and more creatively. Collaboration is a healthier approach,” suggests another.
Both retail leaders and solution providers must be willing to take the steps to broaden their understanding of this tidal shift in retail. But just as important is the need for everyone to be willing to reach across the table to work together and take action.
Have we truly taken the opportunity to fully understand and appreciate the other side of our partnerships? Taking the time to both share and listen will help complement the technology with effective protection strategies and better working relationships. This is critical for retailers in order to get the results that they are looking for. This is also paramount for solution providers in order to tailor their products and service offerings based on what’s truly needed to help take the next steps.
For those already taking the necessary steps to set themselves apart, this should provide ample reinforcement that they are on the right track. For those who are struggling in these relationships, it should provide a strong suggestion as to why the difficulty persists.
Our Biggest Hurdle
As we step forward into a new age of retail loss prevention, embracing change was easily identified as the biggest hurdle for industry leaders to overcome. Our ability to adjust and adapt during this revolution of retail and determining how loss prevention best fits into the company strategy will help us ascertain how we can deliver the most value. We have to be willing to step out of our comfort zone, expanding our education, experience, and leadership roles. We have to be able to stay in front of the business, driving core processes and developing new tools while continuing to support the company strategy.
Being “relevant” is no longer good enough. The role of loss prevention is essential to enhancing the profitability of our companies. Today and heading into tomorrow, the industry must become much more ingrained in every aspect of the business. With new technologies will come new threats. Keeping pace with change will help make us part of the solutions.
Budgets and limited resources will always be a challenge, but should not be an excuse. As margins and competition tightens, our need to show our versatility, creativity, and value to the organization must continue to expand. As it holds true in every area of the business, we must continue to reinvent ourselves. That is simply the nature of retail. The difference today and in the near future is how rapidly that change must occur.
This article was first published in 2014 and updated August 25, 2016.