By Michael Townsley and Benjamin Hutchins

This brief is based on the following paper: Townsley, M., & Hutchins, B. (2020). How Loss Prevention can Future Proof the Retail Sector. White paper, Griffith Criminology Institute.

1. What problem does your research address? Why is this significant?

Our project focused on the impact of COVID-19 to the retail sector, specifically the ways that retail crime changed and the corresponding responses by Loss Prevention teams. Crime in the retail sector encompasses a wide array of offending, including shoplifting, assaults on staff, employee theft, fraud, robberies and burglaries.

Criminologists know that crime is a product of the supply and distribution of suitable opportunities. The public health response to COVID-19 forced businesses to rapidly change operating procedures, often iterating as measures were introduced, lifted and re-introduced. Members of public navigated buying limits, occupancy limits and social distancing. Each of these changes shapes the potential for crime. We sought to understand how this unfolded and what compensating activities were undertaken by Loss Prevention teams to prevent excess loss.

The size of the retail sector to our economy (1 in 10 working Australians are employed in the retail sector) and the role it plays in our everyday lives means that the impact of retail crime has severe consequences for society – far beyond higher prices at the register. Our project initially aimed to understand how Loss Prevention teams dealt with the pandemic lockdown, however it became apparent that our observations could be applied more broadly to times of crisis and accelerated change and are thus applicable more broadly.

2. How did you conduct your research?

We conducted semi-structured interviews with Loss Prevention managers of Australian and New Zealand retailers about their role and experiences during the COVID-19 pandemic and what measures allowed them to operate effectively. Organisations represented included national grocery chains, fashion, department and sporting goods.

In addition, we surveyed the academic and grey literature for information on best practices in Loss Prevention.

3. What are your major findings?

Our first major finding was that during the lockdown stages of the pandemic instances of external theft (i.e. customer theft) decreased.  This appears to have been due to the use of highly visible, customer facing practices, such as a security guard or staff greeter at the store entrance, limited numbers of customers in store, and highly controlled entrances and exits.  While these measures were motivated by social distancing and hygiene requirements, they are familiar measures used to combat retail crime.

Our second major finding was that Loss Prevention teams had less success in new areas of responsibility, such as online sales. Part of this was due to the speed and volume of sales shift from physical to online channels, forcing many businesses to bring forward plans to develop an online presence, or upgrade their existing online capacity to cope with the unexpected increases.  This rapid shift to online shopping not only stressed online systems’ capacity (as happened with Woolworths and Coles in March), it also impacted the distribution and supply chains of the business, creating multiple potential sources of loss.

The final major finding from our interviews was the expectation that the next 12 to 18 months are critical for the retail sector.  Uncertainty was a consistent theme expressed by Loss Prevention managers, with the protracted nature of the pandemic and recurring lockdowns and restrictions making it difficult for businesses to plan ahead.  Loss Prevention managers expect to see an increase in both external and internal theft incidents, and decreased retail spending as financial hardships increase for families throughout Australia and New Zealand. 

4. What does your research mean for policy and practice?

We think the remit of LP needs to be broadened in order to play a more significant role moving forward. One key aspect of this will be increasing collaboration with other departments in the business in order to be across all vectors of loss. For instance, as online shopping trends have accelerated with the pandemic in many businesses, the online fraud team sat outside the Loss Prevention team; these will need to be integrated far sooner than envisaged as customer behaviour is predicted to shift to a multichannel ‘blended’ shopping experience spanning instore and online settings.

We also recommend LP work towards the professionalisation of practice and the industry and suggest a three-step process to do so: (i) establishing an evidence base of effective techniques, (ii) establishing a community of practice and collaboration, and (iii) developing a culture of continuous professional development. 

By establishing an evidence base and rigorously documenting what works and what doesn’t, LP can demonstrate their effectiveness in existing areas, as well as developing techniques teams can draw on in new areas such as online retail. This is likely possible within existing resources, but would be accelerated in partnership with academic researchers.

Communities of practice are networks of professional with a common goal of sharing best practice and facilitate ongoing learning and growth.  Organisations such as the Profit Protection Future Forum (PPFF) provide opportunities for LP professionals to engage with and learn from others in the industry and we believe this kind of collaboration will help LP teams better prepare and recognise threats facing the retail industry. 

A culture of continuous professional development would assist in facilitating ongoing growth and development of the LP industry and further strengthen the development of a foundational evidence base.  Attendance of seminars, training courses, research collaborations, or even brief inter-company secondments would all be effective ways to not only share effective LP techniques but also to develop new strategies for the changing operating environment.

We believe that if implemented, these recommendations will strengthen LP and the retail industry by improving businesses’ adaptability and resilience.  By developing an evidence-base of effective strategies for both recognising and managing risks and avenues of loss, and collaborating and sharing this learning, LP teams will be better equipped for the ‘new normal’ operating environment of the retail industry post-pandemic.