In just about 24 hours, we’ll be releasing our annual report on the state of Loss Prevention in retail. This will be the newest in a multi-year series which, year after year, is one of our firm’s most widely-read reports. All RPW subscribers will receive the link needed to access the full document tomorrow afternoon. In the meantime, I thought it was worth sharing one or two data points that help exemplify just how much the LP landscape has changed in the past year. To sum it up crudely — at least as it pertains to shrink in stores, retail appears to be returning to more normal days.

For example, compared to last year, this year’s respondents hold much more reasonable expectations for the type of loss reductions new LP programs can provide. In fact, 2010 numbers indicate that at a time when retailers were hurting — in nearly every aspect of their day-to-day business — LP represented something of a fictional magic bullet. Indeed, with 63% expecting up to a 25% reduction in losses from a new loss prevention program, it is apparent that many retailers still-in-business at the time were grasping: criminal behavior was no doubt high, but to suggest that one in every four items in stock was being stolen — and was instantly preventable — was hardly a reasonable expectation.

LP is a mightily important component of the retail enterprise, but to put such faith in its ability to fix broken overall retail practices (or economic chaos) is the hallmark of lagging strategy.  

It is, however, worth calling out the variance in this year’s expectations by product segment. The overall numbers cited above are slightly skewed by the still-unreasonable expectations of certain retailers, particularly by those selling Fast Moving Consumer Goods:

• 47% of General Merchandise and Apparel (GMA) retailers expect less than 10% loss reduction from a new LP program; only 13% of FMCG retailers agree;
• Instead, 19% of FMCG feel that a 25-50% reduction in losses is attainable, compared to only 6% of GMA stores; and,
• Another 19% of grocery retailers feel that a new LP program can bring them 50-75% loss reduction — a complete fantasy — vs. only 3% of general merchandise stores.

No doubt, FMCG retailers are tasked with selling some of the most readily saleable stolen goods. In fact, The National Retail Federation’s cautionary list of the most frequently stolen items (often re-sold on eBay, and very often not properly handled/maintained) is comprised predominantly of baby formula, over-the-counter medications, and health and beauty items. Advil, Benadryl, cosmetics, pregnancy tests, Gillette and Schick razors, Nicorette, Rogaine, Similac — the list goes on and on, and virtually all are the domain of the FMCG retailer. Yet in spite of this harsh reality, FMCG retailers really need to adjust their expectations of how they can toe the line on loss; 50-75% reductions are simply not reasonable statistics to expect from any LP department.

We are very excited to release the full report, and will let you know as soon as it is available.