Theft and shrinkage pose significant financial risks to retailers, cutting into profits and disrupting store operations. In fact, the National Retail Federation (NRF) reports that retail shrinkage rose from 1.4% to 1.6% in 2022, leading to $112.1 billion in losses. 

Beyond lost revenue, shrinkage also affects customer safety in retail stores, creating security concerns that impact both employees and shoppers.

To stay ahead of risks, retailers need smart retail loss prevention strategies that go beyond traditional security measures. Retail loss prevention software provides a proactive approach, helping businesses monitor inventory, track incidents, and detect and deter theft. 

Below, we’ll explore how this software works, why it’s a valuable investment, and how Flock Safety enhances retail industry security by addressing external threats.

What is retail loss prevention software? 

Retail loss prevention software helps retailers track, prevent, and minimize losses related to theft, fraud, and operational errors. It works alongside existing store systems — such as point-of-sale (POS) terminals, security cameras, and inventory management tools — to monitor activity and flag suspicious behavior in real time.

Using data analytics and automation, this software helps retailers reduce shrinkage, improve security, and streamline operations via key features like:

• Inventory tracking
• Real-time monitoring
• Incident reporting
• Data analytics and reporting
• Fraud detection and prevention
• Employee training and awareness programs

With these tools, retailers can reduce preventable losses, improve operational efficiency, and strengthen security measures across stores.

Common types of retail loss

Retailers face a variety of loss risks, from external theft to inventory mismanagement. Understanding these threats helps you create an effective loss prevention strategy.

• Shoplifting: External theft reduces inventory and eats into profits. It’s estimated that, by 2026, shoplifting could cost retailers over $150 billion annually. This includes both individual shoplifters and organized retail crime (ORC) groups that target high-value items for resale.
• Employee theft: Internal theft can be just as damaging as shoplifting. This includes cash theft at registers, sweethearting (giving free items to friends or family), and collusion with shoplifters. Employee theft not only causes financial losses but also damages trust and workplace morale.
• Inventory mismanagement: Errors in tracking and stock control can lead to unintentional shrinkage. Misplaced items, incorrect inventory data, or improper procedures can create gaps that make it easier for theft or fraud to go unnoticed.
• Administrative errors: Pricing mistakes, billing errors, or misapplied discounts can cut into revenue. These issues not only hurt profitability but also negatively impact customer experiences when they result in overcharges or incorrect transactions.

By addressing these risks with the right loss prevention strategies, retailers can protect their bottom lines and create safer, more secure shopping environments.

How retail loss prevention software can help retail businesses

Retail loss prevention software helps businesses detect suspicious activity, prevent theft, and reduce shrinkage. To see its impact in action, consider this scenario: 

You own a clothing store and have implemented a loss prevention system. One day, the system flags unusual activity at one of your POS terminals. When you review security footage, you discover that an employee has been processing fraudulent returns and pocketing the cash.

Because of the software's real-time monitoring and data analytics, you’re able to catch the issue early and take immediate action — preventing further losses. Without this technology, the fraud could have gone unnoticed for an extended period, resulting in significant financial damage.

Beyond theft protection, loss prevention software helps retailers reduce inventory shrinkage by spotting patterns of theft and flagging suspicious transactions or activities. Rather than reacting after shrinkage occurs, businesses can take proactive measures to stop losses before they happen— saving both time and resources.

Key reasons to use retail loss prevention software

Retail theft continues to rise. In 2023, shoplifting incidents increased by 93% compared to 2019, with a 90% increase in total dollar loss. As organized retail crime, administrative errors, and employee theft continue to impact businesses, implementing loss prevention software offers several key benefits:

Incident reporting and management

Inventory security systems streamline how retailers document, track, and investigate theft incidents. Automated reporting ensures that all incidents are recorded, organized, and easily accessible — providing valuable insights into theft patterns and areas that need stronger security.

Efficient reporting also saves time during internal and external investigations. For example, if a shoplifting incident occurs, the software can quickly generate a report with security footage, transaction history, and timestamps to help law enforcement build a case and recover losses.

Real-time monitoring and alerts

Retail moves fast, and employees can’t watch everything at once. A staff member might be keeping an eye on the sales floor — but who’s watching the registers? What if a customer is acting suspiciously, but your team is too busy to notice? Without a system in place to monitor transactions and activity in real time, theft can easily go undetected.

Loss prevention software fills this gap by continuously monitoring for suspicious behavior and sending instant alerts to designated staff. This allows employees to respond immediately and stop potential losses before they escalate.

Real-time alerts help reduce shrinkage and prevent theft in retail stores by detecting issues like:

• Suspicious transactions at the register: Excessive returns, unauthorized discounts of high-value items, or multiple voided transactions
• Unauthorized access to restricted areas: Stockrooms, cash offices, or employee-only sections
• Unusual employee behavior: Overrides, excessive refunds, or register adjustments
• Customer behavior that may signal theft: Price tag switching or attempting to remove security tags from merchandise

Enhanced collaboration with law enforcement

When theft occurs, quick and effective collaboration with law enforcement can make all the difference in recovering stolen goods and holding offenders accountable. 

Retail loss prevention software helps by collecting, organizing, and storing critical incident data — including video footage, transaction history, and employee activity — so retailers can easily share clear, actionable evidence.

Flock Safety's Flock OS takes this a step further by integrating video, audio, and license plate recognition (LPR) to equip security teams with real-time intelligence. With this comprehensive data package, retailers can:

• Streamline investigations by quickly compiling evidence
• Provide law enforcement with key details, including suspect vehicles and activity patterns
• Increase case resolution rates and deter repeat offenders from targeting your business

By giving law enforcement the tools they need to act faster, retailers can strengthen their security, improve recovery efforts, and create a safer shopping environment.

Reduced shrinkage and theft

Retail loss prevention software does more than just catch thieves — it helps businesses minimize shrinkage at every level. By tracking and documenting incidents, retailers can spot patterns and take proactive steps to stop future losses.

Beyond theft detection, this software also reduces internal errors and administrative mistakes that contribute to shrinkage. Automating processes like inventory tracking and stock management minimizes human error, ensuring accurate records and preventing stock discrepancies that can lead to loss.

Additionally, the presence of advanced security measures — such as intelligent cameras and motion sensors — acts as a powerful deterrent. When potential offenders know a business has strong loss prevention tools in place, they’re less likely to attempt theft in the first place.

What Flock Safety offers to help deter retail loss 

At Flock Safety, we recognize that retail security goes beyond store walls. Our state-of-the-art technology provides retailers with the tools they need to secure both internal and external risks, creating a comprehensive strategy to deter retail loss.

Enhance delivery and logistics security

Retailers rely on a smooth and secure supply chain, and disruption — whether through theft, fraud, or unauthorized access — can lead to major financial setbacks. 

Flock Safety's LPR technology helps monitor delivery zones and track vehicles entering restricted areas, reducing risks at critical points in the supply chain. With this data, retailers can ensure timely and secure deliveries while deterring retail theft. 

Additionally, our software provides actionable insights into delivery timing, vehicle activity, and unauthorized access attempts, helping businesses detect and avoid threats tied to organized retail crime. These capabilities give retailers greater control over their supply chains, reducing losses from theft, fraud, or damage during transit.

Scalability for multi-location retailers

If you're a retailer with multiple locations, maintaining a consistent asset protection strategy can be challenging. Flock Safety's cloud-hosted solutions eliminate this barrier by offering a scalable and flexible approach to securing stores across different sites. 

Our infrastructure-free technology is easy to deploy, manage, and scale, ensuring that all locations benefit from the same level of security and monitoring. With centralized management, you can oversee security across all stores from a single platform, simplifying operations, audits, and investigations. 

Flock OS enhances situational awareness by layering video, LPR data, advanced analytics, and real-time alerts, making it easier to monitor and protect every location — from anywhere, at any time.  

Monitor high-risk areas beyond traditional store boundaries

Loss prevention efforts shouldn’t stop at the front doors. Thieves often exploit vulnerabilities like back entrances, loading docks, and employee parking lots where security is typically weaker.

Flock Safety extends security coverage beyond the store itself, helping retailers monitor these high-risk areas with intelligent cameras and real-time alerts. If suspicious activity is detected — such as an unauthorized vehicle entering a restricted parking area — retailers receive instant notifications, allowing for a fast and informed response.

For instance, if you operate a retail grocery store, you can use Flock Safety's solutions to track unauthorized access to parking lots and loading zones. Our LPR technology helps identify and match license plates, adding another layer of security to protect inventory and deter organized retail crime.

Secure your retail business with smarter loss deterring solutions

Retail loss prevention software helps businesses protect inventory, reduce theft, and improve operational efficiency. With real-time monitoring, automated reporting, and instant alerts, retailers can reduce losses caused by theft, internal errors, and accounting discrepancies — before they escalate. 

Flock Safety goes beyond traditional loss prevention by securing delivery zones, scaling effortlessly across multiple locations, and monitoring high-risk areas like loading docks and parking lots. 

Our comprehensive solutions provide retail businesses with the actionable insights needed to stop theft inside and outside their stores, creating a safer environment for employees and shoppers.

Protect your business with smarter security. Book a demo today to see how Flock Safety can help reduce shrinkage and safeguard your retail store.