Principles of Loss Prevention Pt 1

Principles of Loss Prevention Pt 1

Increasing profitability is one of the major things to think of when you are a retailer. There are many ways in which you can improve profitability but for this series, we are going to focus on loss prevention and suggest strategies to maximise profit for your business.


Do you know that there are over $30 billion lost in the retail industry annually? This is because of theft, both from external (like shoplifting) and internal (employee theft) sources. A retailer with an adequate loss prevention strategy could very much reduce these losses, as compared to those businesses without a loss prevention strategy in place.

What makes a good loss prevention strategy? A well-structured plan should always have the aim of reducing loss – and it should also include the six key principles of loss prevention in order for it to be a well-rounded, sustainable solution.

PreventiThese individual key principles are symbiotic, but they provide a methodology that is systematic. It focuses on three main things: Prevention, Identification and Resolution of loss. Identifying these principles and relating it to loss prevention provides the retailer the necessary understanding of the mechanism behind the idea of loss, and will ultimately promote an environment of profitability.
The six principles are Prevention, Awareness, Compliance, Detection, Investigation and Resolution. Represented in a ring, each principle has a relationship with the next one beside it. It starts with the most important principle and objective of a program – prevention. However, for a program to be successful, all the principles should be included within your function’s initiative, ideas, technologies and resources.

These principles should work in conjunction with each other to have a holistic solution towards loss prevention. Understanding that loss prevention is not just about theft and error is just the first step. A strong loss prevention strategy also focuses on margin erosion, management of the supply chain and other vulnerable areas that can cause profit loss.


The first principle is prevention. It is obvious that the goal of any loss prevention program is about prevention of loss – and this is the reason why it is the first and the most important of all the six principles. It should play a role within the subsequent principles. For example, even when dealing with detection and investigation, a good program should analyse and identify how the losses occurred to address a resolution so that measures can be developed and prevent future loss.

A well-structured loss prevention program has two core elements that is rooted in the first principle of prevention: Resources and Controls.

Having dedicated Loss Prevention Resources to develop, implement and maintain the loss prevention program provides the retailer a focus on preventing loss thereby increasing profit in the long run. However, it should be noted that this dedication is not just about “assigning” someone with the loss prevention responsibility. Dedicating resources to the development and execution of a program is central to the success of loss prevention and it may include financial and time resources.

Developing and implementing controls are also important. It should be noted that these controls should focus on areas of the business that incur loss such as the point of sale, inventory control, cash control, safety, shoplifting, employee theft, etc. This will help in establishing proper policy and procedures to prevent loss.

Dedicating the business’ resources brings skill, knowledge and attention to the concepts of loss prevention and the continued progression and development of a loss prevention program. Then, the creation of policies, procedures and processes create awareness within the business, and when geared toward the holistic approach to loss prevention, it provides the greatest long-term opportunities to prevent loss and increase company profitability.

Remember, prevention is the driving force behind other the principles of loss prevention.

For information on how CSS Central can help with loss prevention for your business, please use the contact form below to send us a message.

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