Pull Loss Prevention Out of the Shadows, Offer a Seat at the Table

When bad actors take advantage of retailers, abusing a returns policy or conspiring with an associate to steal from the register, they might be tempted to look the other way. Culturally, the organization doesn’t want to think a consumer could be sneaky — someone capable of wearing a dress to prom with the intention of returning it later. They also don’t want to think their own associates would abuse a discount policy.

Retailers know these things happen. They have asset protection (AP) and loss prevention (LP) teams in place for a reason, but they’re often kept in the shadows. Out of sight, out of mind.

But retail loss is too big to ignore: In 2025, the industry lost $796 billion to returns and shrink, according to retailer transaction data across 250 million unique customer identifiers. Returns totaled $706 billion, with 12 percent of that attributed to returns abuse (like returning the prom dress) and 2 percent attributed to criminal fraudulent behavior.

Financial loss hurts a company’s bottom line, and the only way to truly address the problem is by having all departments of the company in sync and collaborating. Finance, IT, Marketing, and Supply Chain need to bring LP and AP leaders to the table and develop a companywide strategy to reduce retail loss.

Create One Shared View of Retail Loss

Collaboration starts with streamlined data and insights. It’s easy to look the other way when retail loss numbers are hiding in silos. Instead, from CFOs to loss prevention leaders, companies need one centralized view of transaction data. Everybody needs to see what’s happening in-store, online, at customer call centers and along the supply chain.

From there, teams can use artificial intelligence to assist in spotting unusual patterns of loss and dig deep into the root of those patterns. Consider a hardware retailer that’s running a summer promotion on power tools. Marketing launches a broad discount campaign to drive traffic. Finance signs off on the campaign based on estimated lift. Stores execute without issue. The campaign performs well.

However, weeks later there’s an odd pattern with product returns. Finance might overlook anything unusual happening, as the returns meet store policy and are in range of sales goals,. However, LP might uncover a pattern of tools being returned and marked as “damaged.” Subsequently, the products are discarded, rather than repackaged and shelved at discount.

Digging deeper, the LP team might find that associates have been miscoding the products as “damaged” as opposed to “opened packaging,” meaning an item was returned in an opened box but in good standing. That miscoding alone could mean millions in preventable profit erosion.

Get LP Involved Early

A more connected company can catch fraud, abuse and errors sooner, but retailers need to realign at the leadership level.

Finance, Marketing, IT and LP must have shared visibility into transactions and patterns within the company. The teams also need to agree on shared definitions of loss, common metrics and outline a consistent approach to decisioning.

The toughest change is cultural: loss can no longer be something the business minimizes or ignores. It must be managed as a core operational discipline.

Retailers that bring LP and AP into strategic decisions will be better equipped to identify where loss originates and how to address it. The ones that keep LP in the shadows will be blind to how consumers and staff take advantage of their processes and policies. The ones that bring them to the table will be ready for what’s coming.

Sarah Cascone is chief marketing officer at Appriss Retail, the total retail loss solution for omnichannel retailers.