Recognizing and Preventing Hidden Loss

Business StrategyWhile loss prevention (LP) professionals are usually very focused on highly visible causes of loss such as shoplifting, organized retail crime and administrative error, they are advised to also consider ‘hidden losses’ that occur without being noticed or tracked. For instance, a shopper does not receive adequate customer service and leaves the store. Merchandise isn’t replenished on the shelves, driving customers to shop a competitor. Or worst of all, lost sales from a customer for life due to a bad experience in the store. While not classified as shrink, these losses, triggered by poor customer service or lackluster operational processes, are just as detrimental to the retailer’s bottom line as theft.


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Common Areas for Hidden Loss in Your Retail Store

A focused effort on a few common areas in which hidden loss may result:

The Checkout Line

A poorly managed checkout line can be hazardous to your health. A long, slow line quickly yields unhappy customers who may drop their merchandise and walk out of the store. Time is precious and customers may decide they don’t “need” the merchandise that badly or are simply unwilling to waste more time in line. Checkout lines can be especially angering to customers if they spot seemingly-idle employees in the store. This is no epiphany. Retailers know how to avoid checkout bottlenecks: all hands on deck! Enlist store managers, idle employees, anyone who is available to assist at the point of sale. Even if employees are restricted from operating registers, they can still move things along by helping to bag merchandise, manage the line, or remove EAS tags.

The Aisles

A hollow “Can I help you?” or no greeting at all means little to a customer. How often do customers give clear, unmistakable signals that they are looking for something they can’t find, but associates are too busy performing administrative tasks behind a counter? Providing true customer service requires employees to go the extra mile. It may mean calling another store to see if they have the merchandise in the size needed, going to check inventory in the back room, or escorting the customer to another part of the store. Is it convenient for the employee? No. Is it critical to avoiding lost sales? Yes.

The Shelf

One of the most significant causes of lost sales is simply merchandise missing from store shelves. This is particularly common with quick-turn merchandise, consumables and clothing. If customers can’t find what they are looking for, they will usually assume the retailer has run out and will go to another store to find it. All the while, the desired goods are likely sitting in inventory, causing a lost sale.

These simple steps can make a huge difference in ensuring that customers get what they came for and actually complete their transactions. Check out Independent Retailer magazine’s upcoming February issue for a more in-depth explanation on how Procedural Review Audits can help in these common areas to reduce or prevent hidden loss. By minimizing lost sales due to poor processes and customer service, retailers can better mitigate the risks of unseen and undetected losses.

Andrew Wren serves as chief executive officer of Wren Solutions, a loss-prevention technology provider helping leading retailers reduce loss and increase profits. Wren is responsible for corporate and product strategy, leveraging his more than two decades of security technology expertise. To learn more about Wren’s solutions, visit