Protecting Retail Profits: Fighting Shrinkage and Safeguarding Margins

It’s not just about what happens on the shop floor, either. From internal theft and vendor fraud through to stock mismanagement and checkout discrepancies, the threats posed to business profit are complex and evolving.

Against that backdrop, let’s explore how a smarter and more proactive approach towards security can help retailers protect their profits, reduce shrinkage and create a safer environment for staff and customers alike.

Understanding shrinkage 

When most people think of retail shrinkage, they picture shoplifters slipping items into bags or bypassing self-checkouts. In truth, external theft is only part of the story (and, sometimes, not even the biggest part).

According to industry data, nearly half of all retail shrinkage is linked to internal threats, including employee theft, administrative errors and vendor fraud. A poorly entered invoice, a stockroom miscount or collusion with a supplier can be every bit as damaging to the bottom line as a stolen item on the shop floor.

What’s more, as retail operations become more complex with multi-channel fulfilment, self-checkout areas and an increased reliance on temporary or seasonal staff, the opportunities for both intentional and accidental loss increase.

With retail profit margins under pressure and operational complexity on the rise, it’s never been more important for retailers to adopt a comprehensive approach towards loss prevention: one that looks beyond the tills and into every corner of the operation.

AI: the game-changer 

Innovations in Artificial Intelligence (AI) are transforming retail operations, not just in terms of customer experience and stock control, but also when it comes to crime prevention. AI-enabled surveillance systems use behavioural analytics to identify suspicious activity in real-time, affording security personnel an early warning of potential theft before it can happen.

This kind of proactive monitoring is particularly effective in high-risk zones like self-checkout areas, which have seen a dramatic surge in misuse. Major retailers are turning to computer vision AI to spot the subtle behaviours that often precede shoplifting, from item concealment and scan avoidance to repeated bagging without scanning or even unusual patterns of customer hesitation or loitering.

What sets this technology apart is its ability to learn over time, improving detection accuracy, while in parallel reducing false alarms: something that has traditionally been a challenge with basic motion-triggered or line-crossing analytics.

Leading UK retailers are embracing AI as a strategic response to what has been described as a ‘self-checkout shoplifting epidemic’, with some reporting tens of millions of pounds in annual losses directly linked to self-service misuse. 

AI surveillance provides not only real-time alerts, but also valuable evidence for investigating repeat offenders, in turn making it a powerful deterrent and a practical tool for loss prevention teams. 

Power of tailored security 

Every retailer faces a unique set of risks shaped by store layout, location, staffing and customer behaviour, which is why security should never be a one-size-fits-all proposition. What works for a small independent shop may be very different to the needs of a High Street fashion chain, a rural homeware retailer or a 24-hour convenience store in an urban setting.

Retail security experts must take the time to understand the specific pain points, whether persistent theft of high-value items, vulnerabilities in the stockroom processes or issues with late-night operations.

From strategically placed surveillance and intelligent surveillance through to tightly controlled access to stockroom areas, the answer is to design and install fully-integrated systems that combine physical protection with smart functionality. Solutions must work together seamlessly to reduce loss, deter internal and external threats and provide clear visibility into store activity, all with one ultimate goal in mind: protecting the bottom line. 

Today’s retail security systems don’t just stop crime. They also unlock valuable business insights. With the right surveillance and analytics in place, stores can go beyond protection and start optimising performance.

By analysing data on customer movement, dwell time, queue lengths and footfall patterns, retailers can improve the layout of key areas, refine staffing schedules and reposition high-margin items for maximum visibility. The same AI-powered cameras that monitor for suspicious behaviour can also reveal what’s working (and what’s not) in the customer journey.

Through our own strategic industry partnerships, Chubb offers access to advanced analytics dashboards that transform raw video footage into real-time and actionable intelligence. Retailers can quickly identify trends, respond to shopper needs and even test the effectiveness of in-store promotions.

By harnessing the full potential of modern security technology, retailers can not only protect profits, but also grow them. 

Wider threat landscape

While physical shrinkage remains a key challenge, retailers are also under threat in the digital space. Recently, Marks & Spencer confirmed a cyber attack that exposed customers’ personal data, including names, e-mails and partial card details. While the company has stated that its systems were not breached directly, the incident is a stark reminder of how interconnected today’s risks have become.

Although Chubb doesn’t provide cyber security services, physical access control (including the protection of server rooms, offices and delivery areas) plays a crucial role in supporting cyber resilience. Ensuring that only authorised staff have access to sensitive areas is a simple, but very effective layer in a retailer’s overall security strategy.

Protecting retail profits is about more than deterring shoplifters. It’s also about building a security strategy that fits the business, detects threats early and delivers measurable results.

With intelligent surveillance, real-time alerts and tailored solutions designed around a given store’s needs, solution providers are assisting retailers across the UK to cut retail shrinkage, improve inventory accuracy and, ultimately, boost the bottom line.

Chris Mursell is Fire and Security Advisor for National and Strategic Accounts at Chubb Fire & Security UK and Ireland (www.chubbfs.com)