Retail Loss Prevention Expertise and Research

Enabling the Retail Sector to Sell More and Lose Less

Missing Item Claims from Third Party Platform Grocery Deliveries

Our ecommerce loss working group recently met, with representation from twenty plus retailers including Tesco, Foodstuffs, Morrisons, Sainsburys, Walmart, Giant, Boots, etc, to reflect on the problem of missing items claims, and sometimes even missing deliveries. In our 2024 research of over 6,000 shoppers, nearly 50% of the shoppers in the sample claimed to have made a false "missing item" claim, the frequency of these missing items claims is perhaps alarming, plus, its clear, that with incentives for pickers prioritising the speed of pick, mistakes can also easily happen. The below summarises the key points that emerged from our review of the research, of four retailer presentations and then group discussion. The Five Key Insights: Unique Challenges with Third-Party Platforms: Retailers face significantly higher refund rates—up to 4x—which is circa 1.3% of all orders, when orders are fulfilled by third-party platforms compared to their own operations. These issues are compounded by: Lack of customer data ownership. Minimal visibility into repeated refund claims. Weak identification processes for couriers (often unauthenticated individuals pick up orders). Platforms allow refunds with minimal verification, enabling abuse. Complexity in Accountability: The delivery chain’s fragmentation makes it hard to pinpoint who is at fault—retailer, courier, or customer. Third-party platforms often make unilateral policy changes (e.g., adjusting refund thresholds), directly impacting retailers’ bottom line without consultation. Fraud and Social Normalisation: Survey and online community research show how common and normalised it is for customers to falsely claim that some food items didn’t arrive. Social media and forums even provide guides and memes about how to exploit refund systems, particularly with food orders due to their perishable and non-returnable nature. What are the current interventions? The following interventions were discussed. Photo proof of high-value items packed (e.g. tobacco, alcohol) - this would be undertaken by the store leader, but the limitation is that this relies on the store to follow the process and then to have a data system to store and then recover the photo when shopper makes the claim. Sealed and labelled bags to prevent tampering. This is an obvious solution but can be defeated and relies on the shopper acknowledging that the seal was present when they received the delivery. It is also an expensive option, especially when nearly 99% of orders do not have a missing item claim. In-store checks before hand-off to couriers. This relies on the courier and platform team accepting, linked to the SLA, the ownership of the order and its accuracy. Courier ID verification and order matching. This is in pilot for retailers, using NFC, or perhaps in the future biometrics, this can help ensure that the right delivery drivers are picking up the right orders. Standardised training for picking staff. Ensuring that orders are more accurate can provide the extra certainty the retailer and courier need to ascertain the veracity of the shopper claims. Dedicated courier pick-up zones with access control. This potentially removes tampering as a possible breakdown and the reason why items might be missing. There is also the potential for CCTV coverage to confirm driver tampering and pick up accuracy. Scanning every item into the bag to prove fulfilment. Most retailers in the meeting have now adopted this practice, so the retailer can be surer that if the product was scanned, that it was picked. What are the planned future actions? The following were discussed * Data sharing agreements with delivery platforms to challenge refund claims with proof from retailers' systems. * Sealed bag technology is under evaluation, though cost is a concern. * PIN confirmation at delivery for high-value orders is being explored. * Pressure for policy transparency and shared accountability with platforms. * Joint retailer efforts to collectively push for changes and better policies from third-party platforms. Finally, for retailers looking to reflect upon their own response to this problem, or about to start working with third party platform, here are five questions that might be helpful to ask of your business. 1. Do we know much higher our refund claims are from third-party platform deliveries compared to our own? 2. To what extent do we have a robust evidence chain of custody capability (scanning, photo, ID checks) for every stage of the order journey? 3. Do we have the capability / data analytics that can allow us to identify repeat offenders, whether customers or couriers, and how easy is it to access that data? 4. Are the refund thresholds and policies for our third party platforms visible, clearly defined and monitored? 5. What could be the role of collaboration between retailers and third parties to help reduce losses, would we want to participate in any retailer share groups? Any retailer, brand owner or academic can join our ecommerce loss working group, at no cost, please click here for the landing page and then sign up to the upcoming meetings.

Retailer Insights on Freight Crime

Cargo theft and supply chain / freight crime presents a growing challenge for retailers. These thefts can be internal (committed by company employees) or external (organised criminals targeting goods) or sometimes a combination of the two as bad actors infiltrate the business by taking up driving jobs with the intention of stealing. The scale of the opportunity is significant, one retailer shared that they have over €200 million of goods in transit every day. Just one basis point of loss would be a significant hurt on the bottom line for any retailer. The problem spans from organised cargo theft by external actors through to internal theft by company employees and then contract drivers, sometimes infiltrated by criminal gangs. With the constant push for productivity savings, most retailers do not carry out extensive accuracy checks of deliveries received from their own distribution centres, this can mean, at worst, that these crimes can go completely unnoticed, and at best, that the missing products are detected but a long after the time when the goods were originally stolen. This lack of visibility to the problem and absence of any hard data on the scale, timing and nature of the losses creates a "blind spot" for many retailers, and so it is perhaps no surprise that we see very divergent approaches and levels of investment in team members, with many retailers not even resourcing a full time loss prevention manager position dedicated 100% to freight crime. However, when retailers were recently survey as to the percentage of their overall unknown loss number that they believe can be attributed to freight crime, the consensus was eight percent, by any means insignificant. Thinking specifically about what was being stolen, the working group has identified that it was the high-value, fast-moving goods such as tobacco, wine and spirits, health and beauty items, and even toys like LEGO that were the primary targets. These products are often untraceable and have high resale value, making them very attractive to thieves. The theft typically occurs in two scenarios: Organised External Theft: This involves fake transport contractors, cloned company identities, and “strategic theft” where criminal gangs intercept shipments by posing as legitimate carriers or. Internal Theft: This includes drivers, particularly from third-party logistics providers, stealing goods during transit. Common tactics involve tampering with security seals, using GPS jammers to block tracking, and manipulating delivery records. The role of collusion is high, where members of staff at the distribution centres and stores, playing a critical role in enabling freight crime. Further, there are also several systemic weaknesses that also help enable freight crime, namely: The absence of robust inbound checks at the store, especially for the deliveries from their own Distribution Centres where the adoption of the “assumed receipt,” process has meant that goods are not verified upon arrival, giving room for theft to go unnoticed. It is noticeable that the secure totes retailers used for tobacco, or other high value items were said to be less targeted by the thieves. The weak vetting of transport partners. Fraudulent subcontractors can infiltrate supply chains using fake credentials or hijacked logistics identities. This news piece from the UK expands on this problem (click here) The poor and low levels of technology adoption, for example, the limited use of GPS tracking, tamper detection, and real-time monitoring reduces visibility during transit. And for those retailers who have actually adopted this technology, a further limitation is their lack of understanding as to how these systems can be tampered and the tracking data corrupted. As highlighted earlier, because data on this problem of skimming is hard to measure, monitor and track, not least because the data and problem sits across functions, with sometimes competing incentives, each retailer chooses to prioritise it differently in their response and then resource allocation, for example: One UK retailer has invested heavily, growing their security team from 4 to over 20 (including 12 investigators and 4 analysts), deploying anti-tailgating locks, GPS tracking, covert operations and data analytics to identify unscheduled stops and suspicious driver behaviour. Yet, another retailer, based in USA with over 8,000 store locations shared that they have only just this year appointed one full time employee against freight crime, and up until their appointment had not made a single apprehension of a driver caught stealing. Other retailers in our working group we believe sits somewhere between the two, with different levels of investments in dedicated resources, GPS systems, trackers, locks, data analytics and reporting. Thinking about the actions retailers are taking to prevent, mitigate and manager, the below five are the most common actions. , Strengthen Driver and Partner Vetting: Implement robust ID and background checks for all logistics providers and subcontractors. Deploy GPS, Tamper and Lock Technology: Adopt GPS systems with tamper alerts, seal monitoring, and jamming detection tools and super strength locks. Improve Inbound Verification: Transition away from “assumed receipt” but without adding store hours, by using digital pallet validation systems or AI-driven image comparison. Centralise Intelligence and Incident Reporting: Establish dedicated teams to analyse suspicious behaviours, track loss patterns, and share intelligence with other retailers and police. Design Targeted Prevention Measures: Focus on route analysis, secure parking, and predictable routine disruption. The above is not meant to be an exhaustive list on possible actions, for example, there is a role for government policy makers to increase the sanctions for freight crime. An excellent resource for some further context and detail on this problem is the report by Professor Emmeline Taylor that can be accessed for free via this link. Click here. As retailers seek to strengthen their internal freight crime capability, here could be five questions they could ask of themselves to assess their readiness to manage the problem of freight crime. Do we have real-time visibility of goods in transit, including GPS tracking and tamper detection? Are we exploring new innovative and automated ways to verify the accuracy of the deliveries at distribution centres to confirm complete receipt of goods? How robust is our vetting and oversight of third-party transport partners and subcontractors? Do we have a dedicated team analysing transit data and investigating suspicious patterns? Are we collaborating effectively with law enforcement and peer retailers on cargo theft intelligence? This problem of freight crime will be a focus for the working group going forward, with online meetings planned to support a collaborative approach to the problem. Any retailer or CPG can join the working group at no cost. Click here to learn more and register for upcoming meetings.

"Proud Dad of Two": New Research on the Impact of Messaging on Name Badges in Retail

Fascinating new research from Australia (click here) that looked at how to cut down on Customer Verbal Abuse (CVA) – this when customers shout at, insult, or threaten frontline employees. Our working group consistently call verbal and physical abuse in their stores as a growing problem for their business, leading to physical injury, mental stress, lower morale, greater absence rates, higher staff turnover, lower retention while making it all the harder to recruit. All this we know. This research was centred on a low-cost, practical solution, called “under badges.” These are small tags worn under an employee’s name badge that show a tiny bit of personal information – for example, “I’m studying engineering” or “Proud dad of two”. The hypothesis was that if were to humanise staff – to remind customers they are real people, not just “store workers.” that the levels of abuse would reduce. The project explored this hypothesis via three methodologies: Interviews with retail employees – Staff said that when they wore under badges, customers were often kinder, more patient, and more respectful. The personal touch made them feel more human in the eyes of the customer. A test with 600 shoppers – In a simulated situation where service went wrong, customers who saw staff wearing an under badge were less likely to verbally abuse them. A repeat test of 600 shoppers – The results held true again, showing the idea works and is reliable. In short, the research showed that small, personal details on badges made a big difference. They didn’t stop every angry customer, but they cut down on verbal abuse and made interactions more respectful. It works because people are less likely to be rude or aggressive when they see the other person as a human being. The badge helps break down the “us versus them” feeling that can build up in stressful retail or security situations. When customers feel a personal connection, they’re less likely to lash out. Given these insights, this could be a practical, low-cost idea that any organisation can use to deliver, Reduced number of physical and verbal abuse incidents. Better morale and retention, when employees feel respected, they are more likely to stay in the job and do it well. Improved customer atmosphere, A more positive tone in stores often leads to fewer thefts and arguments. Retailers who might want to act on these research insights might want to consider these five ideas. Do a trial of under badges – Add small, optional tags under name badges that share something human, not private. Examples: “Mini fan,” “Animal lover,” “Here since 2021.” Train staff to use them positively – Remind them they can choose what to share and that it’s about creating empathy, not giving away personal details. Promote “service civility” – Make respect part of your store or site culture. Clear signs saying “We treat everyone with respect” can reinforce this. If this is something you feel inclined to test, maybe you can follow their methods, listen to staff and track changes in incidents and let us know your results?

Zalando’s Returns Strategy: A Model for Smarter, Preventative Returns

For some online retailers, over a third of what they sell is sent back at a huge cost, this was one of many research findings from our true cost of returns research project. Click here. The report also included recommendations around leadership, data systems, returns prevention strategies, approaches to lowering the costs, both financial and environmental. As the time when we undertook our research, Zalando was consistently called out as a retailer with a reputation for thinking differently about returns. This article summarises what we know about their approach, which is grounded on a superb paper published in the California Management Review (click here) written by two academics at WHU, Felix Johannes Röllecke and Arnd Huchzermeier, along with David Schröder who at that time (2017) was the Senior Vice President of Convenience, he is now, Co-CEO, at Zalando. These learnings augment our own research and are summarised below, along with a five point checklist to benchmark your own business's approach to returns - the Zalando way. The very first thing to call out is that Zalando treats returns not as an unavoidable cost, but as a data opportunity. They flip the traditional way of thinking, viewing returns as a strategic lever to boost customer satisfaction and lifetime loyalty, not just as a problem to minimise. As they say, happy customers come back! Their approach combines prevention, customer convenience, and intelligent systems. Second, they aim to prevent returns through better decisions upfront They use very high-quality images and videos to show products from multiple angles and in motion, helping customers understand fit and fabric. They leverage "Fit Prediction" tools using machine learning to suggest the right size based on a shopper’s past orders and returns — for example, advising a customer that they have returned items like this previously. They then add rich customer reviews to highlight fit, feel, and fabric, guiding buyers to make more confident choices. Third, they aspire and seek to deliver a frictionless returns experience Zalando’s free, rapid and easy returns processes are central to its brand promise. Pre-paid labels, quick refunds, and app-based returns create trust and loyalty, encouraging customers to keep buying. Returns are seen as part of their great customer service, not a punishment for their shoppers. This convenience has helped Zalando build a powerful data set on return reasons, product performance, and customer behaviour. Fourth, they create data-driven prevention and feedback loops The company analyses return data by product, brand, size, and customer segment to identify patterns and feed them back into product design, supplier selection, and customer guidance. If a product has a high return rate, Zalando works with suppliers to fix issues with fit, photography, or descriptions. Fifth, they leverage technology and add AI integration Their recommendation and sizing algorithms draw from millions of purchase and return interactions to constantly improve accuracy. Real-time dashboards track returns by SKU and region, giving early warnings about products likely to cause dissatisfaction. Their mindset is that every return teaches them something, and to enable and constantly improve their strategy they empower their teams to propose and test new ideas. With the circular economy in mind, they look to turn product returns that they cannot resell or refurbish into value, through their outlet stores, with the worst-condition items (damaged and unsellable) either recycled for materials or responsibly disposed of. Finally, while there is no C Suite officer, such as the Chief Returns Officer, Zalando, the clear link of returns to the customer experience, sustainability goals and cost control, ensures that the accountability and oversight for returns sits with the board, with the operations assuming day to day responsibility for execution. Below might be a helpful five-question self-assessment checklist retailers could use to benchmark themselves against the Zalando way of managing returns: Strategic Mindset: Do we treat product returns as a source of customer insight and loyalty growth, rather than just a cost to minimise? Prevention Through Clarity: Are we helping customers make the right choice first time — using rich imagery, fit tools, and authentic reviews to reduce preventable returns? Customer Experience: Is our returns process frictionless, fast, and trust-building — something that strengthens our brand promise instead of frustrating customers? Learning and Feedback: Do we analyse return data to identify root causes and feed those insights back into product design, supplier management, and merchandising? Technology, Sustainability, and Accountability: Are we using AI and analytics to predict and prevent returns, recovering value through refurbishment or recycling, and ensuring board-level ownership of our returns strategy? Each “yes” can help you move closer to the Zalando standard — where returns fuel loyalty, insight, and circular value rather than losses. If your business would like to join our retailer ecommerce loss working group and participate in our regular online meetings, the annual innovation summit and new research, then please click here.

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ECR Retail Loss is a global collaboration between retailers, suppliers and academics, working together to better understand and manage the causes of retail loss..

Our community includes 400+ of the biggest global retailers (our current Board members are from Aholddelhaize, Nike, Next, and Tesco) alongside consumer goods manufacturers, academics and researchers. Together, we explore practical ways to reduce shrink, fraud, food waste and other preventable losses across all channels.

Through regular working group meetings, peer-led research, benchmarks and reports, we support loss prevention professionals, asset protection, store teams, and retail leaders in making smarter decisions to reduce shrink, protect assets, and meet rising expectations from customers and stakeholders.

Real world insights influence everything we do to support your teams, stores and operations. From preventing theft to improving inventory accuracy.

Our eight priority areas are set by our members.

Video in Retail: the evolving role of surveillance, AI and analytics in deterring crime
Food Waste and markdowns: reducing preventable waste and aligning shrink reduction with sustainability goals
E-commerce Loss: tackling fraud, returns abuse and delivery risk in online retail
Inventory Accuracy: why better stock data reduces shrink, improves margins and builds trust
On-Shelf Availability: ensuring products are where they should be, when customers want them
Self Checkout: balancing customer experience with effective loss prevention at SCO
RFID in Retail: using real-time data to track goods, reduce shrink, and improve replenishment
Retail Loss, Safety and Security: protecting people, products and profits in an age of rising threats

We help you sell more and lose less by tackling every major form of retail loss:

Shoplifting, employee theft, internal fraud, external threats
Returns abuse, self-checkout manipulation, operational errors
POS system mistakes, stock inaccuracies, spoilage and waste
Supplier fraud, delivery discrepancies, vandalism, and more

We share actionable strategies to prevent loss, strengthen store safety, and improve visibility across all retail operations. That includes smarter loss prevention protocols, upgraded security cameras, AI, facial recognition and POS systems, real-time RFID tracking, enhanced EAS tagging, updated policies and processes and practical training programmes.

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