Loss Prevention for Modern Retail Challenges

The world of retail is heavily influenced by factors such as economics, supply chains and consumer trends, which leave an ever-changing landscape for retailers and grocers to navigate.

Although there’s many positives and opportunities associated with working in this fast-paced sector, recent years have been extremely challenging for decision makers in retail. Firstly, stores have rolled a record number of self-serve technologies such as self-checkouts and Scan & Go, often without Loss prevention strategies to underpin their use, putting profits at risk. More recently, interest rates have risen, resulting in some of the worst cost of living crises for decades. This all follows the Covid-19 pandemic which had detrimental effects on businesses and consumers alike.

The result of all of these pressures is a uptick in theft, particularly first offenders who had no previous criminal background(1). Theft – regardless of whether it’s from employees or customers – is a major cause of shrinkage, which is bad news for a retailer’s bottom line. In fact, shrink has experienced a worrying 47 percent surge since 2020(2).

It’s never been more important for retailers to move with the times and implement a solid loss prevention strategy that can pivot to meet marketplace challenges.

"UK retailers reported an 18% rise in theft in the second half of this year, while US National Retail Federation figures indicate that shoplifting has risen there by 26.5%. David Harris for Talking Retail"

Self-Checkout: From Then To Now

Retail self-checkouts have changed dramatically since their invention in the 1980s. Initially, there were some barriers to consumer adoption, with many shoppers arguing that the technology was actually more inefficient. Often, people struggled with the interface of a machine, and queues to self scan were longer than manned checkouts(3).

In recent times, the introduction of cloud-native, intuitive technologies has powered frictionless shopping experiences. Many customers started using self-service more often during the Covid-19 pandemic, when people were concerned about social distancing. This habit seems to have stuck, as now over 70% of customers prefer self checkouts.

It’s easy to see why customers have warmed to the self-checkout experience. When done well, it boosts convenience, speed and privacy. It’s fast becoming the norm across many different industries (think hospitality, fast food, fashion and more), which familiarizes customers with the user experience in spaces other than retail.

But it’s not just customers who benefit from self-checkouts – businesses do too. On average, retailers leading the race in self-checkout and self-serve technology experience up to 8% basket growth, a 10% loyalty increase, and considerable financial benefits.

“The self-checkout sector is expected to be worth $10.4 Billion by 2030.” 2023 Self-Checkout System and Market Report .

Retail Tech To Bolster Loss Prevention Strategies

There are, however, risks that come with introducing self-checkouts. In nine out 10 cases, shoplifters targeted self-checkout registers. If theft is occurring at your self-checkout, your shrinkage rate (the discrepancy between the inventory list and the number of products actually in stock) will skyrocket. And shrinkage has a direct negative impact on a retailer’s bottom line.

Luckily, there are a range of loss prevention technologies out there that counter self-checkout theft and therefore protect profits. Read on to discover three next-gen tools that help to safeguard against shrinkage:

Loss Prevention Tool #1: Self-Service Loss Prevention

  • Self-Service Loss Prevention (SSLP) is an intuitive tool powered by Machine Learning (ML)
  • It works by identifying shopping patterns leading to theft at a store level
  • The tool can assign a theft probability level to every self-service customer in the store
  • These theft probabilities are updated in real-time for every step of the customer journey
  • SSLP offers customizable parameters that can be adjusted based on factors such as store crowd level, staff availability, time of the day, and more

Loss Prevention Tool #2: Attendant App

  • Easy-to-use remote access apps enable employees to monitor and interact with checkout stations – all whilst physically being in other areas of the store
  • They are available across different devices such as smartphones and tablets
  • The user interface (UI) pushes through alerts, notifications and calls for assistance, so that shoplifting threats are quickly identified and dealt with
  • In addition, remote access apps provide real-time insights to scanned items on all checkout stations, enabling teams to monitor and respond to any suspicious behavior

Loss Prevention Tool #3: Item Recognition Software

  • When retailers implement this technology, products are automatically recognized and confusing menu search structures can be bypassed
  • This tool counters theft (both internal and external)
  • It prevents shoplifters from using well-known techniques such as swapping out barcodes and intentional mis-scanning
  • Item Recognition Software also aids frictionless shopping experiences and reduces human error
  • Customers no longer have to spend time searching through endless product lists, which is particularly common in categories such as fresh fruit and vegetables


Quick Checklist: What to Look for in a Loss Prevention Partner

Selecting a technology partner to implement a loss prevention strategy can feel daunting at first, with many features and modules to choose from.

Whatever form of digital transformation your business goes through, a reliable and future-proof tech partner should offer:

  • Strong system architecture, with the option to integrate with 3rd party software such as surveillance cameras
  • A clear, streamlined User Interface (UI) and User Experience (UX) underpinned by testing
  • The option to personalize – for both employees and end users
  • A flexible solution that continually improves and grows with your business
  • Cutting edge innovations such as machine learning, automation, or computer vision

“Whether the focus is on inventory recovery, customer safety or employee empowerment, technology is helping businesses to find gaps in process faster and enable the business to react quicker to drains on their profits and risks to their customers and employees.” Jamie Burr, App Manager, Resolver Inc.

Step into the Future of Loss Prevention

With self-service forecasted to grow at a compound annual growth rate (CAGR) of 11% by 2030, and customers demanding ever-more personalized and seamless checkout experiences, it’s vital that retailers and grocers implement tech tools such as SSLP, Attendant Apps, item recognition, and more to mitigate any risks of self-service and self-scan offerings.

Ready to level up your Self-Service and Loss Prevention (SSLP) strategy? Download our free guide, crafted by the retail specialists at Extenda Retail. Building on what you’ve learned about loss prevention, it contains an actionable step-by-step checklist as well as exclusive trends and insights into the future of retail and grocery.

Click here to request your copy of our loss prevention checklist: The 360° strategy to reduce retail shrinkage and maximize profits, and ensure you’re steering your business towards seamless, secure, and profitable transactions.

“45% of retailers increased their loss prevention budgets in 2022.” Michael Keenan for Shopify

Tap into self service loss prevention technology powered by machine learning


(1) https://www.talkingretail.com/news/industry-news/self-checkouts-are-a-less-morally-troubling-target-for-shoplifters-09-12-2022/

(2) https://retailwire.com/discussion/can-enhanced-self-checkout-stop-shrink/

(3) https://blog.gitnux.com/self-checkout-statistics/#:~:text=What%20percentage%20of%20shoppers%20prefer,40%25%20faster%20than%20traditional%20checkout

(4) https://retailwire.com/discussion/can-enhanced-self-checkout-stop-shrink/

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